Samsung Electronics, SK hynix, Kioxia, Micron and other four global NAND flash manufacturers are collectively cutting NAND flash supply in the second half of this year. Analysts say production losses are unavoidable as they both guide price hikes through supply control and switch production lines to quad-level cell (QLC) processes, where demand is surging led by artificial intelligence (AI) data centers.
At the same time, Samsung Electronics, SK hynix and Kioxia are pushing to raise NAND prices that stayed at cost levels throughout last year. In particular, Samsung Electronics is said to be internally reviewing price hikes of 20%–30% or more while discussing next year's NAND supply volumes with major overseas customers.
Looking at annual NAND flash output data from market researcher Omdia obtained by ChosunBiz on the 12th, Samsung Electronics has revised this year's NAND wafer production target down to about 4.72 million units, around 7% less than the previous year (5.07 million). Kioxia also adjusted output from 4.8 million last year to 4.69 million this year. Omdia expects the production-cut stance of Samsung Electronics and Kioxia to continue into next year.
SK hynix and Micron are also conservatively limiting output to capture the effect of higher prices. SK hynix's NAND output fell about 10%, from 2.01 million units last year to around 1.8 million this year. Micron is in a similar situation. Micron is keeping production at its largest NAND base, the Fab 7 plant in Singapore, in the low 300,000-unit range, maintaining a conservative supply posture.
As major suppliers move in unison to control output, the average selling price (ASP) of NAND products is also rising sharply. NAND prices, which rose 15% in the last quarter alone, could surge by 40%–50% or more going forward, according to overseas market research firms. According to TrendForce, the wafer spot price of the widely used 512Gb triple-level cell (TLC) NAND chip rose 14.2% from the previous week to $5.51. The spot price is the price for immediate transactions in the distribution market, and an increase in this price means it has become harder to obtain the product.
A shortage of TLC-based NAND volumes also means major NAND suppliers are focusing on the more profitable QLC instead of TLC. QLC and TLC refer to the number of bits stored in a single cell, the basic unit of NAND flash. TLC stores 3 bits per cell, while QLC can store 4. With the same area, QLC can secure 30% more capacity than TLC, making it advantageous for producing large-capacity SSDs essential for AI data centers.
An industry official said, "In the process of converting existing TLC-based NAND production lines to QLC, which is essential for SSDs for AI data centers, a natural production-cut effect is occurring at all four major suppliers as some TLC NAND production equipment stops," and added, "As a rule, the 'loss' in output that occurs during equipment and process conversions leads to a sharp rise in market prices."
Meanwhile, Samsung Electronics and SK hynix, which had long struggled with oversupply, have moved to maximize profitability amid signs of NAND price hikes. Earlier, U.S.-based SanDisk was reported to have raised contract prices for NAND products by up to about 50% starting this month. With major North American big tech firms engaging in "panic buying" on concerns over a sharp rise in NAND prices, some analysts say next year's NAND supply volumes are already sold out.