SK hynix's NAND flash business is falling behind rivals such as Samsung Electronics in the pace of converting older production lines to newer generations, leaving a productivity gap that has been hard to narrow. As of the second quarter this year, older nodes such as 176-layer NAND still account for more than half of SK hynix's output mix, while Samsung Electronics has already completed its shift to 236-layer as the main node.
According to the industry on the 28th, 176-layer accounted for around 50% of SK hynix's NAND production mix in the second quarter this year. A person familiar with SK hynix said, "Unlike competitors that have elevated 200-layer-class NAND products to a solid mainstay over the past year, SK hynix still depends heavily on 176-layer-class products when looking at total domestic and overseas capacity compared to competitors." The industry commonly explains that a structure with a high share of 176-layer is disadvantageous in cost competitiveness because the number of bits produced per wafer is relatively small.
Perhaps with this in mind, SK hynix said on last month's earnings conference call that its 321-layer products took the largest share of first-quarter NAND production, but that figure is on a capacity basis and differs significantly from actual market output tallies compiled by market research firms such as Omdia. Some analysts say SK hynix is emphasizing progress on its technology roadmap, such as expanding the share of 300-layer-class, but that it has yet to be clearly reflected in actual sales performance.
◇ Layer count determines productivity… at a disadvantage versus Samsung Electronics, Micron, and YMTC
NAND flash boosts both capacity and cost efficiency by stacking data-storing cells vertically in a "stacking" method. Even with the same wafer area, the higher the layer count, the more data it can hold, which improves both output per wafer and cost competitiveness. Because of this, companies that fail to move to next-generation nodes must投入 more wafers and line operating hours to produce the same volume, inevitably ending up in a disadvantageous position in profitability.
As of the end of the second quarter this year, 236-layer exceeded 60% at Samsung Electronics, already established as its main node. While both SK hynix and Samsung Electronics have 200-layer early-to-mid-generation nodes, there is a clear gap in the actual pace of mass-production conversion. An industry official explained, "Samsung Electronics is concentrating production volume on specific generations to capture Production yield and costs at the same time, whereas SK hynix operates multiple generations in parallel, which inevitably reduces line operation efficiency."
It is at a disadvantage not only against Samsung Electronics but also compared with Micron and China's YMTC. According to Omdia, as of the end of the second quarter this year, Micron's 232-layer accounted for 53%, with the next-generation 276-layer expanding to 33%. YMTC's 232-layer share reached 68%, indicating it already has a production system centered on advanced nodes.
In the case of Kioxia and SanDisk, as of the second quarter this year, 162-layer (BiCS6) was 37% and 112-layer (BiCS5) was 34%, meaning older nodes still accounted for about 70% overall and the generations look similar to SK hynix. However, the share of the latest BiCS8 (218-layer) jumped from 9% in the fourth quarter last year to 24% in the second quarter this year—nearly tripling in two quarters—earning reviews that the transition speed itself is fast.
◇ Gap detected in revenue share… investment pullback is the backdrop
This trend is also detected in revenue share. According to the industry, SK hynix's (including Solidigm) NAND revenue share climbed to 21.4% in the fourth quarter last year but plunged to 16.4% in the first quarter this year, a drop of nearly 5 percentage points (P). Over the same period, China's YMTC jumped from 11.5% to 16.2%, catching up to almost the same level as SK hynix. Some interpret this as a relative lack of volume responsiveness while NAND prices were rising.
An industry official said, "When prices are rising, the higher the proportion of new generations, the more the increase in average selling prices combines with cost improvements to have a larger impact on margins," adding, "The decline in SK hynix's share should be seen as the result of delayed generational transition beyond a simple volume issue." The person added, "The recent upcycle in NAND prices is continuing, so the impact on results themselves is limited."
Another analysis suggests SK hynix also found it difficult to accelerate NAND node transitions because, on the capital expenditure side, it prioritized DRAM and high bandwidth memory (HBM). SK hynix's capital expenditure in the NAND institutional sector was $3.5 billion in 2023, $3.0 billion in 2024, and $2.9 billion in 2025, declining for three consecutive years.