Due to lower than expected IT demand, the price of NAND flash memory has begun to decline. According to reports, major storage companies are planning to adjust their utilization rates and may shift their investment focus to DRAM in the future.
Major companies such as Samsung Electronics, SK Hynix, Micron, and KIOXIA are considering plans to reduce NAND utilization and cut investments.
According to reports, the utilization rate of the main NAND production lines will briefly recover to 80% -90% in early 2024 after dropping to 20% -30% in 2023. However, apart from high-capacity NAND technology, the demand for general-purpose NAND products is still relatively low, which has prompted companies to gradually adjust their utilization rates based on market conditions.
Initially, it was widely believed in the industry that the PC and mobile device markets would enter a replacement cycle in the second half of 2024. However, the economic recession led to a decline in consumer confidence, and the expected wave of updates did not materialize.
Although the demand for enterprise solid state drives (eSSD) required for some products such as artificial intelligence (AI) data centers remains strong, orders from mobile device and PC manufacturers have not increased. Therefore, the securities industry predicts that the replacement cycle will be postponed to the second half of 2025.
The fixed trading price of NAND began to rise in October 2023, but stopped rising in March 2024 and experienced a decline in September 2024. The industry is concerned that NAND general-purpose products may face production cuts again and may return to the level of 2023.
The main reason for this situation is that although IT product demand has not fully recovered, companies like KIOXIA and Western Digital (WD), as well as Samsung, SK Hynix, and Micron, have begun to increase NAND shipments, leading to market saturation.
Therefore, companies such as Samsung and SK Hynix that operate both NAND and DRAM are shifting their focus to DRAM. At present, the demand for DRAM products in the field of artificial intelligence continues to grow, especially for high bandwidth memory (HBM) or CXL DRAM, with orders from major customers such as Nvidia continuing to increase. Therefore, it is necessary for storage vendors to increase their production capacity.
There are reports that Samsung is considering converting a portion of its P4 NAND production line to DRAM to ensure a monthly production capacity of over 60000 chips. SK Hynix may also transfer some of its NAND production capacity from its Cheongju M14, M15X, and M16 factories to produce HBM.
Industry insiders predict that due to significant production cuts in 2023, NAND prices will temporarily rise, but as IT demand recovers, prices are expected to decline again. It is expected that customer inventory adjustments will become a long-term development process, and major storage manufacturers may decide to reduce production earlier than market expectations.
