In 2024, the original manufacturers pushed up NAND wafer prices, but the SSD market is facing a double squeeze.
With overall consumer demand sluggish and the government ramping up tax audits, module manufacturers first offloaded their inventory in the second quarter and have recently seen a wave of selling.
Although wafer prices remain high, the spot market prices for finished products have dropped back to the starting point from 2023. It is anticipated that market turbulence will continue until the end of the year, with some specialized products potentially experiencing short-term shortages.
Industry insiders note that over the past two years, the government has actively promoted domestic supply chains, and many module manufacturers have seized the opportunity to secure government projects and local brand orders, leading to rapid growth in performance and the emergence of new companies competing for market funds.
However, with the overall economy struggling and local finances tightening, multiple publicly listed storage-related companies are reporting tax audits in 2024. Several senior executives have been targeted, and they may face substantial tax liabilities to resolve the issues, intensifying the audit crisis and leading to a wave of panic selling in recent months.
Supply chain sources indicate that the authorities are reviewing past records from the last four years, scrutinizing the import and export data and material processing information of various companies. Some firms previously disassembled second-hand products meant for domestic distribution and exported them overseas.
While there was no actual import procurement, companies declared tax refunds during material exports, and some lack comprehensive import/export documentation when purchasing downgraded products, leading to tax authority inspections and growing anxiety.
Although module companies noticed weak market demand in the second quarter and initially offloaded much of their low-priced inventory to cash in, they enjoyed robust operating profits in the first half.
The market had initially expected a return to healthier levels in the second half, hoping for a boost from the traditional consumption peak in the third quarter. However, with tax audits intensifying and demand remaining weak until September, market price discrepancies have failed to improve, leading to a gloomy atmosphere, with industry players joking that they are even selling off their last reserves.
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