Samsung Electronics reportedly plans to increase the price of NAND flash memory by as much as 20%. This comes after selling the memory at cost levels for over a year due to a supply surplus. The company has now decided to renegotiate with large customers to get a fair price and minimize losses in the NAND flash business, where supply and demand have recently stabilized.
According to industry sources on Mar. 13, Samsung Electronics will renegotiate prices with major mobile, PC, and server customers in March and April this year. It is expected to push for a price increase of 15 to 20%.
“The first-quarter price negotiations between major memory semiconductor manufacturers such as Samsung Electronics and SK Hynix and their customers have not yet been concluded.,” said a semiconductor industry insider, adding, “However, customers are rushing to secure supplies as the price of NAND flash has been steadily increasing, and the fears spread that NAND flash cuts will continue this year.”
The NAND flash market experienced one of its worst periods last year, with inventories rising due to weak demand and oversupply. Last year, Samsung Electronics and SK Hynix posted operating losses of nearly $8.3 billion (11 trillion won) and $6 billion (8 trillion won), respectively, from their NAND flash businesses. Unlike D-RAM, NAND flash has a large number of suppliers, including Samsung Electronics, SK Hynix, and Micron, as well as Japan’s Kioxia and the U.S.’s Western Digital, so it was difficult for the market to normalize even when major companies cut production.
Starting from the second half of last year, there was a balance between supply and demand in the market as Samsung Electronics, SK Hynix, and Micron began implementing high-intensity cuts that brought utilization rates below 50%. Since the fourth quarter of last year, NAND flash prices, which had previously been selling at cost levels, have begun to rise slowly.
In fact, according to market research firm TrendForce, NAND flash prices have increased for five consecutive months. The fixed transaction price for NAND Flash memory card-USB general purpose (128Gb 16Gx8 MLC) was $4.72 in January, up 8.87% month-over-month. Last month, it rose 3.82% to $4.90.
“Buyers are purchasing more NAND flash products even during the off-season to secure inventory.” said TrendForce. “Vendors are pushing price increases to minimize losses, and we expect NAND fixed transaction prices to increase 15-20% in the first quarter of this year.”
