DRAMeXchange is reporting that the bit output from the NAND Flash industry is higher than expected as yields for 64-layer 3D NAND production has remained steady through 2018. NAND Flash demand has remained sluggish as the shortage of Intel CPUs continues, lower-than-expected iPhone sales and the specter of a trade war that is leaving a dark cloud over the tech industry. This set of circumstances is expected to cause a 10% drop in the contract prices of NAND Flash products in 1Q19. Client SSD contract prices are predicted to fall 10% in 1Q19 as global notebook shipments during the same period are expected to decrease by 15% QoQ. This is despite the increasing SSD adoption rate in the PC market and upgrades. The Enterprise SSD market is expected to continue the same trend as strong competition in the sector has driven prices lower. Even the eMMC/UFS sector is expected to see a 10% contract price drop as Chinese smartphone manufacturers struggle to burn through the excess inventory. With regard to the demand in channel market, module makers have abundant supply this year, but as the NAND Flash prices continue to fall, module makers need to clear their inventories at the end of each month to cut loss. They even have to sell defective products to keep profitability, which is rather disruptive in the market. While major NAND Flash suppliers make a good profit this year, module makers are struggling with the worsening profitability. Looking ahead, the market situation is highly likely to remain tough for module makers in 1H19.