With the China government about to end its crackdown on the smuggling of NAND flash products, distributors in the local channel market are gearing up to rebuild inventory which will help chip prices to start rising after March, according to industry sources.

China has been cracking down on the smuggling of NAND flash products since the country prepared the annual session of its parliament, the sources observed. The ongoing probe has discouraged distributors and traders from procuring, and is clouding spot price trends, the sources said.

With the government event coming to an end, China is expected to wind down its investigations into the illegal importation of products, the sources indicated. NAND flash demand and orders, which hit bottom in February, are set to recover, the sources said.

In contrast, NAND flash demand coming from system OEMs remains relatively strong, the sources pointed out. Demand for microSD cards and embedded memory devices has been picking up at a gradual pace as the peak season approaches, the sources said.

NAND flash contract prices for March are likely to stay unchanged, the sources estimated. Some suppliers tend to lower their quotes in order to boost shipments, which could offset the price falls, the sources said.