Samsung starts cutting NAND flash production

Samsung recently issued its Q1 2023 earnings guidance, revealing a continued deterioration in business performance. Revenues declined by 19% year-over-year, while profits plummeted by 95.8%, marking the worst performance since the 2008 financial crisis. The primary cause for the revenue decrease in Q1 2023 was the weakened performance of the memory division. Consequently, Samsung has abandoned its no production cuts stance, stating that it will adjust memory chip production to meaningful levels, with ample inventory to address future demand.

According to Business Korea, Samsung has already begun reducing NAND flash production, focusing primarily on its Xian-based factory. It is understood that Samsung plans to adjust NAND flash production capacity to 620,000 12-inch wafers in Q2 2023, representing a 5.34% reduction compared to Q4 2022.

Photo by Babak Habibi on Unsplash

Samsung’s Xian Plant 1 saw a monthly output of 125,000 12-inch wafers in Q4 2022, which is expected to be reduced to 110,000 wafers—a decline of approximately 12%. Meanwhile, Xian Plant 2 is set to see a reduction from 145,000 to 135,000 wafers per month, a decrease of around 7%. The Xian factories primarily produce 6th generation 128-layer V-NAND flash memory, accounting for roughly 40% of Samsung’s total NAND flash production.

Samsung holds a substantial market share in the global NAND flash market, reaching 31.6% by Q3 2022, far surpassing second-place ADATA, which holds a 21.1% share. Additionally, Samsung boasts unparalleled cost competitiveness. The decision to significantly cut NAND flash production demonstrates the severe challenges currently facing the memory market.