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  September 17, 2009

Promotional USB Outlook – prices to increase through 2010

NAND_Flash Price outlook

Those of you that regularly purchase USB Memory sticks should be familiar with fluctuating prices. During 2007 and 2008 the prices for USB’s was relatively cheap due to a good exchange rate for the dollars and oversupply of flash memory. Today the prices are going up due to a weak pound and undersupply of flash memory in the market.

The main reasons is that Flash Producers invested heavily in production facilities  during 2006-07 which resulted in overcapacity and forced them to sell flash memory at prices below production cost to pay off their investment in production facilities.
This has scared them to invest in more equipment and now with increased demand the prices has escalated as the supply is lower than demand. This year alone the industry has grown by 100%, even in recession due to increased demand for flash in devices such as SSD (solid state hard drives) and mobile phones.

Its expected that the price will stabilise during 2010 and we also have new technology such as TLC – triple level cell and 4LC which is aimed at the more low tech devices so hopefully the manufacturers will be able to offer this for the promotional market at a more attractive price. There is no word on when these might be available as yet.

Also we see that the higher capacity drives are not as affected by the price raise as the low capacity ones but of course in the promotional market is very cost conscious. On the other hand we see that higher capacity becomes more mainstream and that clients are willing to pay more for 2GB and upwards.

So to those of you in the market for Branded USB Memory sticks it might be wise to get your orders in sooner rather than later.
For the resellers its important to warn clients of price fluctuations so they are prepared.

On the upside this is something that affects everyone and this will affect everyone in the market so the competition will struggle with the same problems of rising purchase costs.

I hope this helps explain some of the story behind the price fluctuations in the market..

Johan Ellingsen
USB Company