Update: MP4 Player Prices And Flash Memory News

Author Dragan Berak 14.8.2007. | 16:20


UPDATE!
 

Thank goodness! Flash prices are finally back to normal now by the second week of September.

Who knows how long these volatile flash memory prices will remain low – grab the chance and get your wholesale stock before the Christmas rush!

Enjoy!

– PS – Click here to find out about a new, cheaper shipping option from Chinavasion.

 

Regular importers buying from the Chinavasion.com online wholesale shop will have noticed with dismay that in the last two weeks, prices of MP3 and MP4 Players have been climbing like crazy. That’s not the news we usually like to give out!

In fact, our helpline has been ringing off the hook with a lot of electronics buyers asking "what the…!"

So first a message for Chinavasion customers: "Sorry – We are doing our best to keep the prices low – But this is not only here… it’s a global effect caused by…"
 

…A Huge Increase In Flash Memory Prices Worldwide!

In the two weeks since the start of August, prices for factories obtaining NAND flash memory chips for personal media devices and mobile phones have leapt up by over 20RMB (US$2.64) for 1GB modules, and over 25RMB (US$3.30) for 2GB.

This is the biggest and most sudden increase in flash memory prices we can remember.

To put the price rise into perspective, US$2.60 on one MP4 Player normally priced at USD 30.00 is almost a 9% price increase. That sort of increase is more than the normal margin of most suppliers, meaning they are making a loss if still committed to sell at previous prices. Many online sellers like eBay electronics Powersellers have likewise had their profits wiped out, having put up items for sale at the previous prices, only to find after selling the items that fulfilling the orders will cost too much.

During 2007, flash prices have mostly been falling, leading to better and better prices for consumer electronics which incorporate this memory, including MP3 Players, MP4 Players, MP3 / MP4 Watches, Car DVD Players, Digital Cameras, and Digital Photo Frames.

The continuous slide of memory prices throughout 2006 and the first half of 2007, coupled with previous evidence of volatility of this ‘commodity’, means that everyone in the electronics manufacturing industry considers it foolhardy to hold any considerable quantity of stock. Who wants to stockpile something that is declining rapidly in price?

Since hardly any factories are holding stock of flash memory, and the demand from import orders is big but sporadic for factories, the impact of this sudden unpredictable price increase has been particularly negative for the market.
 

Chinese Firms Suffer – And Importers Wait…

It’s not only Chinavasion but also other MP3 / MP4 Player distributors that are feeling the squeeze from increasing flash memory prices. We have heard of two factories – a USB Pen Drive factory and an MP4 Player factory – forced out of busineses in the last two weeks. Importers have all but stopped placing orders for flash memory electronics, no doubt considering the prices "outrageous". The factories have no choice, since the flash memory is the governing price factor in small personal electronics… and without orders Chinese factories can go under very quickly.

According to one manager of a factory that supplies Chinavasion with MP4 Players Watches, they received several orders from Europe which were at a guaranteed price rate for the different flash memory capacities of the watches ordered. They had no choice but to proceed with fulfilling the orders, and due to the high quantities ordered are now set to lose almost 2,000,000RMB (US$264,114). This poor factory boss was quoted as asking one customer if they didn’t mind changing an order to regular digital watches without the MP3 function!

The flash price hike couldn’t be happening at a worse time for global electronics importers. August and September typically show a spike in large volume orders heading for Christmas, and Chinese suppliers in the electronics manufacturing hubs of Shenzhen and Guangzhou are reporting these orders just aren’t coming in at the moment. Now many big buyers like Carrefour and Wal-Mart are said to be holding off placing their advance Holiday orders in a hope the prices will come back down.

 

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Chinavasion MP4 Players:
Buyers Grabbed Wholesale Stock As China Supplier Prices Leapt

 

Speculation About Samsung

So, what on earth caused this increase in flash memory prices?

Chinese factories are being told by their flash suppliers that it’s due to a huge shortfall of production caused by "a fire in a Samsung factory".

The giant Samsung corporation virtually controls the production and supply of flash memory (with almost 45% of the market), so a problem in their output could be the culprit…

Chinavasion delved deeper into this story, and indeed it’s true Samsung put out a press release about a production glitch in a factory in Korea. However, this was a temporary power outage on only one day – Saturday August 4th – and production was reported to be back to normal almost straight away. The "fire in a factory" story is a nice example of Chinese Whispers in action!

To read more about the Samsung factory problem as reported by Korean news website chosun.com, click here.

It seems to us this event in itself isn’t enough to cause such ongoing, steep price increases everyone is seeing here in China, unless the "one day" of power outage caused a really big knock-on effect in lost production volume. That sort of information would probably not be released by Samsung, although there has been speculation by analysts that a one-day outage could in theory result in a knock-on effect with a drop in production of 20% this quarter.

But what else could be giving the market jitters and causing shortages?

 

iPhone Production Gobbling Up Flash

Another rumour surfacing among Chinese electronics insiders is that the enormous – and perhaps unpredicted – success of the newly released Apple iPhone can be blamed. Early discussion about the use of flash memory in the iPhone led many to believe prices for flash would be driven down. But it seems possible that the supply of flash is just not up to the demand of Apple when added to the ongoing growth of the Mainland China consumer electronics industry.

The iPhone incorporates 4GB or 8GB internal flash memory, and the rate at which Apple have been buying the flash chips led the Taiwan memory clearing house DRAMeXchange to issue a press release stating that Apple could be eating up as much as 25% of the world’s flash memory production, and that this will lead to major shortage during the rest of 2007. Now if a statement like that doesn’t lead to market price hikes…

The true reason for the current price trend may not be clear for weeks, but one thing is for certain: this really isn’t good news for anyone except the flash memory sellers like Samsung, Hynix, and Toshiba
 

Months to come?

The question on everyone’s minds now is "when is this madness going to end?"

Can we, in fact, expect flash memory prices to go back down any time soon? And when they go down, will they be back to the low levels we saw in July 2007?

The word among Chinese factory management is that these high prices are going to stick around "for another month"…!

Chinavasion can’t offer any false promises on this, so please stay tuned – and we promise to report all insider updates when we hear them. And of course THE MOMENT the flash memory prices are even a bit lower, we’ll pass on these savings for you.

 

That’s all the buzz for the moment – and keep your eye on Chinavasion New Products to see what gadgets we’re adding for you to stock up and resell as we rapidly approach the Christmas buying frenzy!

Enjoy!

Your Chinavasion Team

 

 

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Author Dragan Berak 14.8.2007. | 16:20
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4 Comments

  1. Karen August 14, 22:35

    I’m really happy with your prices. If they are increased it will still be fine for now. I would like to get the product in the days promised. THANKS for your information and keeping me informed.

  2. Sean August 15, 08:17

    I really have to hand it to you your communication is better then most American Companies.

  3. Salahuddin September 14, 01:33

    Thanks a lot for the regular information that you gave me, I am happy to find the better prices today.

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