Samsung Electronics and SK hynix, which together hold more than 60% of the global NAND flash market share, are expected to cut NAND flash output this year. As inference artificial intelligence (AI) competition heats up led by Nvidia and supply of NAND flash, a core component, tightens, prices are likely to keep rising across servers, PCs and mobile. Analysts say this will be as big a boon to Samsung Electronics and SK hynix's operating profit margins as DRAM.
According to data from market researcher Omdia obtained by ChosunBiz on the 20th, Samsung Electronics slightly lowered its NAND wafer output from 4.9 million last year to 4.68 million this year. That is even less than the reduced production implemented last year due to sharply deteriorating NAND profitability in 2024. SK hynix's NAND output is also expected to follow a similar path, from around 1.9 million last year to 1.7 million this year.
Given that this year's NAND market is seeing demand surge on the back of AI, supply controls by major suppliers Samsung Electronics and SK hynix are likely to deepen shortages not only for AI servers but across mobile, PCs and other segments. According to Citi, the solid-state drive (SSD) capacity in the next-generation AI accelerator "Vera Rubin," which Nvidia will mass-produce in the second half of the year, is 1,152 terabytes (TB), more than 10 times the existing "Blackwell." With Vera Rubin shipments expected at 30,000 units this year and 100,000 next year, that translates into new demand of 34.6 million TB in 2026 and 115.2 million TB in 2027.
The prevailing view is that the reduction in NAND output at Samsung Electronics and SK hynix reflects that capital spending priorities have shifted toward DRAM, which shows the highest profitability metrics. In addition, as demand for high-capacity SSDs for AI data centers grows, natural output losses are inevitable during the process of converting lines to QLC (quad-level cell). The transition from existing triple-level cell (TLC) technology to QLC, which is better suited for AI data centers, involves multiple factors such as equipment setup, stabilization periods and initial Production yield.
Executives at Samsung Electronics and SK hynix are also said to see no reason to push to increase NAND output. For NAND, profitability has deteriorated for a long period to the point that Samsung Electronics and SK hynix had to focus on defending prices, and they can use this memory supercycle to maximize profits as much as possible. A semiconductor industry official said, "It is unclear whether the NAND cuts by Samsung Electronics and SK hynix are intentional or natural, but either way, the gains from the cuts will be greatest this year."
Some also say the move reflects awareness that supply of commodity Chinese NAND is increasing. Unlike Samsung Electronics and SK hynix, China's YMTC has been raising its profile in the NAND market since last year and steadily increasing volume. To counter low-priced competition from China, the companies appear intent on reducing NAND supply to mobile and PCs to defend profitability, while increasing server and enterprise volumes to manage the production mix.
Major market research firms expect NAND prices to begin a full-fledged rise from the first quarter of this year and are closely watching supply adjustments by key vendors. TrendForce expects first-quarter NAND flash contract prices to rise 33%–38% from the previous quarter and noted that Samsung Electronics, SK hynix and others are maintaining a conservative NAND production stance. IDC also projected that NAND supply growth rate will be around 17% this year, below the average of recent years.