The demand for NAND flash memory is once again on the rise, prompting leading companies such as Samsung Electronics, SK Hynix, Kioxia, and Western Digital Technologies to ramp up wafer input at their cutting-edge production lines. However, as the rapid expansion of supply could fuel a price hike in NAND Flash, manufacturers are proceeding cautiously, keeping a close eye on competitors’ moves. Industry insiders anticipate that the sector, which was a major contributor to the semiconductor industry’s significant losses last year, will fully recover by next year.
According to industry sources, Samsung Electronics has increased wafer input at its Pyeongtaek campus and the Xi’an NAND flash production line by approximately 30% from the previous quarter starting in the first quarter of this year. The supply of NAND flash, which hit its lowest point in the fourth quarter of last year after recording the lowest operating rates since the company’s inception, is showing signs of normalization this year. Samsung Electronics holds the top position in the NAND Flash market.
However, Samsung Electronics is reportedly adopting a cautious approach. This is because a sudden increase in supply could trigger inter-company volume competition, potentially leading to a repeat of last year’s oversupply situation. An official from Samsung Electronics explained, “While it is true that the NAND Flash market has passed its worst period, it is still difficult to determine if it has fully recovered.”
It is reported that Samsung Electronics has set a quarterly wafer input cap of around 1.2 million units from the second quarter to the second half of this year to observe market conditions. Considering that exceeding 2 million units of wafer input per quarter would occur if Samsung Electronics operates its entire NAND Flash production line at 100%, this indicates an intention to limit the operating rate to around 50%.
Samsung Electronics is expected to reaffirm its stance on NAND Flash reduction during its first-quarter earnings conference call at the end of this month. During last year’s fourth-quarter earnings conference call, Samsung Electronics stated that, unlike DRAM, NAND Flash continued to face excessive inventory issues from major customers, hence maintaining a high-intensity reduction policy.
Similarly, Kioxia and Western Digital Technologies have been expanding their supply since the first quarter of this year after entering a phase of NAND Flash supply reduction in the third and fourth quarters of last year. According to the latest data from Omdia, the combined wafer input of the two companies in the fourth quarter of last year was around 1.02 million units. However, in the first quarter of this year, it increased to around 1.22 million units, indicating a 20% increase in supply.
Nevertheless, market research firm Omdia predicts that these two companies are unlikely to further increase their supply at the current level. A domestic semiconductor industry official commented, “In the case of NAND Flash, it appears that there has been an implicit agreement among major companies after passing through the worst period of losses last year,” adding, “Samsung, which boasts the largest production capacity among NAND Flash companies, hesitating to expand supply is also influencing competitors’ business strategies.”
SK Hynix has also taken a conservative stance on NAND Flash production since the second half of last year. According to industry sources, SK Hynix has set a quarterly wafer input cap of approximately 600,000 units for this year, implying that only 50-60% of its entire production line will be operational, maintaining a reduction policy.
