A question we get asked quite a lot here at USB2U from our repeat customers is why the price of their branded USB sticks has changed since they last ordered? A valid question that I think we need to address. As hard as it is to believe we don’t actually enjoy charging our customers more for their USBs when cost prices go up, especially when they have used us as their trusted promotional supplier over so many years.
Unfortunately, it all comes down to the way flash drives are manufactured and how the supply chain effectively operates. Below, we’ll go through just some of the challenges that we as a company face when it comes to pricing our USBs on a daily basis.
How are Flash Drives made?
All modern flash drives will start out life on what is called a Silicon Wafer, a thin, delicate structure designed for integrated circuits that are found in flash drives, computers and even mobile phones.
FACT: Silicon is the most common semi-conductor on Earth and the most widely used in the electronic and technology sector.
Each Silicon Wafer is designed to be broken into multiple pieces for use in a variety of different components including USB drives. Many pieces will be serialised and can be stacked together to create 3D integrated circuits which are more complex and offer a greater level of density. Larger memory size USBs will inherently contain more wafer layers inside of them.
In general, the silicon wafer will be used to create NAND chips. Such chips are non-volatile meaning they do not require a constant power supply to preserve the data stored onto them, making them ideal for flash memory devices.
NAND chips are manufactured specifically in fabrication plants or ‘fabs’ for short. Only a small number of these factories exist in the world, and therefore have direct control over the overall supply and, more importantly, the day-to-day market price. The majority of these factories are located in China, however, some facilities also exist in Taiwan, Singapore, Japan, and South Korea.
These chips are considered to be a critical component in a number of electronic devices, not just USB sticks. Modern computers, smartphones, and tablets all have NAND chips within them, thus all companies in these markets will inevitably purchase from the same supply chain. This, of course, creates problems if demand increases or there are issues in other market sectors as these will have a knock-on effect on supply and ultimately, market price.
NAND Chip Demand Issues
The smartphone market, in particular, is notorious for causing supply chain issues.
Big tech companies with large buying power such as Samsung and Apple will often purchase huge quantities of NAND chips for use in the production of their latest smartphones.
This therefore significantly reduces the overall supply available in the market which causes the price to subsequently rise for everyone else looking to buy, including us!
While it has gotten easier over the years for factories to cope with such large orders, new tech products are being created all the time with many subsequently requiring flash memory to function.
NAND Chip Supply Issues
It’s not just demand issues which can affect the price of USBs, it can also be supply based as well. The most expensive times to buy USB Flash Drives are February/March and September/October time where China observe their own national holidays.
You may have heard us before talking about how it’s important to order USBs before the Chinese New Year and Golden Week, well the reason for this is that production factories including ‘fabs’ close for up to 2-3 weeks over these periods. This causes a rise in demand, due to a shortage in production, which in turn leads to prices sharply rising. We ourselves have seen an increase in cost-price from 30p to anywhere up to £1.20 per unit before, during these periods.
Because only a small number of factories exist in the world if only a few of them close for just a few days, the price of the chips would likely go up. This was very much the case back in 2011 when Japan was hit with an earthquake and tsunami causing many factories to close, which consequently halted production of NAND chips out of the country for several days and ultimately led to prices increasing.
Exchange Rate Fluctuations
Exchange rate fluctuations in general cause headaches for many businesses out there who buy from abroad. When it comes to buying NAND flash the issue is no different. Many companies, including ourselves, have to purchase these chips using US$ dollars and convert back into £’s. If the exchange rate is unfavourable between the two the overall cost price will inherently increase. This has been most apparent in recent years due to Brexit where the £ substantially depreciated against the $ and therefore we as a company ended up paying substantially more for flash drives. Even today the £’s value hasn’t quite reached the same level as it was before the referendum, therefore those who haven’t ordered from us in a while may see a noticeable increase in the price of their branded USB sticks.
Things to keep in mind when you next order USBs
NAND chips could be considered a tech commodity as their price is always determined by current supply and demand similar to that of Gold and Oil. There are times of year where prices will tend to rise and also times where they will go down, it’s always worth having a little look to see what is happening in the sector.
If you’re looking to purchase large quantities of USBs the following tips may be able to help you determine when best to buy:
- Look to order before February and September to avoid the closure of factories in China and the price rises that follow.
- Watch out for tech news especially related to new/upcoming product launches by large companies. These should give you an indication that the price of USB flash memory is set to increase.
What we can do at our end…
USB2U has become quite adept over the years of being able to predict when price rises are expected and will always try and order stock in advance. This means we can hold a variety of USBs in our own UK stock which helps to reduce some of the price volatility experienced.
Like any other commodity however, there is still an unpredictability to ordering at any time of year as prices can change daily, this is why our quotes are only usually valid for a limited time.
USB2U Guarantee and Promotional Tech
Our dedicated team will always do their best to get you the best price possible on your promotional USBs. Often we will look at several supplier options before coming back to you with a quote ensuring we try and obtain the best possible price.
Even if you find a cheaper supplier elsewhere, it is always best to check with us, as in most cases we will able to price match a like-for-like quote.Back