The flash memory market is currently experiencing an imbalance, with an oversupply of products and decreasing prices due to low demand. However, the recent decision by Chinese company YMTC to raise prices for its 3D NAND products may seem unusual at first. But when considering various factors, including the company's position in the global market and market nuances, the motives behind this decision become more understandable.

According to a report from China's domestic market DigiTimes, YMTC consumes nearly 20% of the global memory production, highlighting its significant market presence. The company has been benefiting from the pressure of sanctions, which work in its favor. Sanctions imposed by the US government, effective since October last year, require a halt in supplying China with equipment for producing 3D NAND chips with more than 128 layers. However, these sanctions do not currently apply to Samsung and SK Hynix, who are still active in China. As a result, YMTC faces reduced competition in the domestic market.

Moreover, Chinese authorities have also prohibited the utilization of Micron Technology memory in critical infrastructure facilities, further clearing the path for YMTC to establish its presence in the Chinese domestic market.

Reports indicate that YMTC already raised the prices of its 128-layer memory chips with 512 GB capacity from $1.4 to $1.5 per unit in May. Currently, the company aims to further increase the price to $1.6. This trend is unconventional, as it defies the typical market tendency of decreasing prices. While US sanctions seek to weaken YMTC's position by limiting its access to process equipment and materials, two factors counteract these actions. Firstly, government support assists YMTC in managing the impact of sanctions. Secondly, the company has built up sufficient inventories of equipment and materials to sustain continuous production of 128-layer 3D NAND chips for the next three years.

Simultaneously, Chinese authorities are encouraging local organizations and companies to adopt domestic components, ensuring a steady demand for YMTC's products in the foreseeable future. This favorable market condition allows YMTC to raise prices for its flash memories at this time.