Samsung Electronics has reportedly decided to reduce its NAND flash production centered around its factory in Xi’an, China. This move appears to be a measure to protect revenue as a surplus of NAND supply continues globally, leading to expectations of a sharp price decline this year. Considering that SK Hynix is increasing its NAND supply, Samsung Electronics seems to be concluding that it can no longer maintain the overwhelming productivity it once had with its NAND processes.
According to industry sources on the 10th, Samsung Electronics has set a policy to reduce the wafer input amount at its largest NAND production base, the Xi’an factory in China, by more than 10% compared to before. As a result, the wafer production at the Xi’an factory, which was averaging 200,000 units per month, is expected to decrease to about 170,000 units. Additionally, lines 12 and 17 in Hwaseong are also set to regulate their supply, leading to an overall downward adjustment in production capacity.
Samsung Electronics previously implemented production cuts to reduce losses caused by the NAND supply surplus in 2023. At that time, Samsung Electronics cut its NAND wafer input amount by nearly half to address the surplus, and SK Hynix, Micron, and Kioxia also followed suit, which led to a normalization of NAND prices. Afterward, as demand recovered, Samsung Electronics increased its average monthly production to around 450,000 units.
In the NAND market, various companies, including Samsung Electronics, SK Hynix, Japan's Kioxia, the United States' Western Digital and Micron, and China's YMTC, are competing against each other. Although Samsung Electronics still holds the top position in terms of production capacity and market share, intense price competition among companies in key demand sectors like PCs, mobiles, and servers is gradually decreasing revenue.
According to the market research firm DRAMeXchange, the fixed transaction price of generic NAND flash products for memory cards and USBs (128Gb 16Gx8 MLC) was $3.07 as of the end of October, a decrease of 29.18% from the previous month ($4.34). The price of this product has shown a decline for two consecutive months since August ($4.90), with a sharper drop in the last month compared to September (-11.4%).
Enterprises' solid-state drives (SSDs), which are gaining attention as artificial intelligence (AI) memory, are experiencing strong demand. Last year, both Samsung Electronics and SK Hynix reported revenue; however, recently, as major companies' inventories have accumulated, demand has slowed. TrendForce predicted that the prices of enterprise SSD products, which previously showed relatively strong trends, would rise by only 0-5% in the fourth quarter of last year and then decline by 5-10% in the first quarter of this year.
In contrast, SK Hynix plans to gradually increase its NAND production this year. Since last year, SK Hynix has become more confident in its NAND technology, particularly achieving high sales and profits in the enterprise SSD sector. An industry insider noted, "Considering the current NAND price trend and the supply surplus, production cuts are a reasonable choice, but SK Hynix increasing its supply scale appears to be an expression of confidence in gaining a competitiveness advantage over Samsung."
TrendForce explained, "The NAND market has faced long-term stagnation for over a year due to oversupply, but this year, opportunities for a turnaround have emerged centering on enterprise SSD products for AI data centers, yet it has found itself back at the crossroads of stagnation again."