Samsung Electronics is planning to raise its NAND flash memory chip prices by 20 percent in the first half of next year in a bid to boost profitability, according to industry insiders familiar with the matter.
The company has conducted intense production cuts after a year-long supply glut sent NAND flash prices plummeting, and hopes to regain bargaining power over prices in 2024.
Industry research firm TrendForce predicted on Monday that Samsung Electronics will push for a 10 to 20 percent NAND flash price increase by the end of this year, followed by another 20 percent price hike in the first half of next year.
The company has suffered billions of dollars of losses as demand for memory chips dropped sharply in the past year, and is ramping up efforts to normalize its semiconductor business by the fourth quarter. Samsung's sweeping price hike is expected to have a ripple effect on competitors such as SK Hynix, Micron, and Kioxia.
Weak NAND demand has been a major concern for the company throughout the year. Demand remained sluggish across all segments, including mobile, server, and PC. NAND prices dropped 10 to 15 percent in the first quarter of this year. Major chipmakers have since slashed production to ease oversupply.
After posting a $4.58 trillion loss in the first quarter, Samsung executives decided to cut production at an unprecedented level. The Xi'an plant in China has shut down more than 50 percent of its production lines, according to a source close to the company. Investment in the company's Pyeongtaek P3 plant in Korea, which was scheduled for this year, has also been scaled back.
While Samsung expects the memory chip market to rebound in 2024, the company plans to continue production cuts until inventory levels return to normal.
"The big picture for Samsung is for the market to shift to a supply shortage in the second half of next year," said an industry insider. "This will open up a new phase for suppliers who have lost bargaining power throughout the year."
Prices of NAND flash memory chips for smartphones, computers, and servers are expected to rise in the fourth quarter of this year as a result of production cuts, said TrendForce.
Client SSD prices, which are used in computers, are predicted to increase 8 to 13 percent, while Enterprise SSD prices are expected to rise 5 to 10 percent. Prices of embedded multimedia cards (eMMCs) and universal flash storage (UFS) are expected to jump 10 to 15 percent.
This article was originally published on Nov. 6, 2023.