Sylvie Barak recently reported that both Sandisk and Toshiba are going to idle some of their memory plants.
What does this mean for you and I… there appears to be a memory glut at the moment which should result in lower prices on flash memory. This news is coming at a time that the factories should be in full production.
These memory chips are used in everything from computers to cameras, cell phones to cars, and yes – our beloved USB Memory Stick.
I can remember a few years ago when right around September my main supplier would boost prices, reporting expected shortages. Yesterday he sent a note in reply to the Sylvie Barak article that he expects demand destruction to adjust prices.
His main point is that many of the USB flash memory distributors in the US are overstocked with inventory. Flash memory is a commodity. If you have too much inventory at this time you will be selling it for a price lower than it currently costs. Thus – a lot of these companies may go under quickly.
We shall see. There are a lot of companies holding inventory right now. Our own USBFlashMemory.BIZ web based business holds minor amounts of inventory to meet current demand. One way around the problem is to order ONLY what you need at the moment. That’s called “just-in-time” inventory and that is how we will be navagating the current price destruction.
We have learned from past experiences. If you blink the 1GB memory stick that you paid $200 wholesale will drop to $6 or lower just that fast. That is exactly why a memory business should keep limited inventory. That situation has repeated itself for every drive size, every year that we have been in business.
Just-in-time inventory is a good strategy for our business but some of the “decorators” (custom logo companies) must carry a variety of styles, colors, and sizes to meet their customer’s future expectations. Those companies will probably be dumping memory and completed USB flash drives very shortly.
The bottom line for the consumers of these flash memory drives – prices in the near term are going down! Long term – we shall see but if history is any indication, I would expect prices to drop long term as well.