South Korea’s leading chipmakers, Samsung Electronics and SK Hynix, and Japan’s Kioxia have been ramping up production of NAND flash memory chips. This shift comes as the sector’s NAND flash glut eases after memory chip demand rebounded this year.
But demand for general-purpose products, excluding high-capacity NAND for AI data centers, has yet to recover. Experts are concerned that increased NAND production could limit future price gains.
Japanese memory chipmaker Kioxia recently ended production cuts by increasing production to full capacity at its Yokkaichi and Kitakami plants, according to Nikkei on June 17. Kioxia cut production by 30% in October 2022 when demand for the chipmaker’s 3D NAND declined. Kioxia is the world’s fourth-largest 3D NAND producer.
NAND flash memory chips, used in smartphones and other electronic devices to store data, struggled with oversupply amid weak demand last year. In response to a market glut that caused NAND prices to plummet, major chipmakers, including Samsung Electronics, SK Hynix and Kioxia, cut production. NAND flash production capacity at Samsung Electronics and SK Hynix plants fell to 20-30% at one point last year. Samsung’s Xi’an plant in China reportedly saw its operation rate drop as low as 10%. Western Digital and Micron also cut production, reducing their production capacity to below 50%.
Extensive production cuts have partially alleviated the oversupply, causing NAND flash prices to rise. Demand is recovering, particularly for high-capacity NAND flash used in AI data centers. Market research firm TrendForce predicts NAND flash prices will increase by 13% to 18% year-on-year in the second quarter of this year. The NAND flash market revenue is projected to reach $62.4 billion this year, up 63% from last year.
Samsung Electronics, SK Hynix, Kioxia, and Western Digital, which account for over 80% of the global NAND flash market, are now resuming full production. Samsung’s NAND flash production capacity has climbed to around 70%, while SK Hynix is ramping up production of high-capacity NAND products, such as high-capacity eSSDs. Western Digital, the third-largest NAND flash producer, increased its production utilization rate to around 90%.
“The production capacity of Samsung’s Xi’an plant is expected to rise to 80% in the second half of this year,” said Lee Kyunga, an analyst at Shinhan Securities.
Some experts are concerned that rapid production increases could outpace demand, potentially suppressing NAND flash price gains. “Except for high-capacity NAND used in AI data centers, it is difficult to say that the entire NAND market is recovering,” said Kim Yang-peng, a researcher at the Korea Institute for Industrial Economics and Trade. “The sudden production surge will likely bring down NAND prices, which have been rising.”
