Samsung expands NAND flash memory production cut to 50%
In the first quarter of 2023, Samsung recorded its most dismal performance since the financial crisis of 2008. The semiconductor segment suffered substantial losses, with the deterioration in the performance of the memory division being the principal factor for the reduced quarterly revenue. Consequently, Samsung deviated from its “no production cuts” stance, initiating reductions in the production of DRAM chips and NAND flash memory from the second quarter onwards, to address the sluggish demand and ensuing price decline.
As the world’s largest NAND flash memory manufacturer, Samsung, holding approximately 31% of the market share, has a direct influence on market trends. A recent report by TrendForce reveals that Samsung, beginning in September, has augmented the cutback in NAND flash memory production to 50%, primarily focusing on products with technologies below the 128-layer process. It is anticipated that other manufacturers will adopt this approach, further curtailing NAND flash memory production in the fourth quarter, with the intention of accelerating inventory reduction while stabilizing NAND flash memory prices, predicting a rise between 0-5%.
This strategy of artificially constraining production capacity to curtail price declines and offset deficits has traditionally been employed by DRAM chip and NAND flash memory manufacturers. Micron and SK Hynix had previously adopted this approach. However, Samsung, historically adhering to a counter-cyclical strategy, had only opted for production cuts as a last resort.
Contract prices for NAND flash memory saw a rebound in August. With the broadened scope of production cuts, it is hopeful that client stockpiling will rejuvenate, driving a continuation in the rise of contract prices through September. To sustain this upward momentum into 2024, mere production cuts won’t suffice; the crux lies in whether there’s a significant resurgence in corporate SSD purchase orders. Given the nebulous market outlook, NAND flash memory manufacturers need to exercise heightened prudence in production control to restore the market supply-demand equilibrium.
