After a rebound from the decline in NAND prices, the current quotations still show a gap from reaching the breakeven point for suppliers such as Samsung, Kioxia, SK Hynix, and Micron.
Major domestic players in the NAND Flash industry indicate that NAND Flash suppliers, driven by the goal of profitability, will continue to aggressively raise prices. It is anticipated that prices will need to increase by over 40% once again for major manufacturers to break even. To achieve profitability, future price hikes are expected to be at least 50% or even higher, according to Economic Daily News.
Looking at the global NAND Flash market share in 3Q23, according to a report from TrendForce, Samsung holds the leading position with a market share of 31.4%. The second position is held by the SK group, with a market share of 20.2%, followed by the U.S.-based Western Digital at third place with a market share of 16.9%. The Japanese company, Kioxia ranks fourth with a market share of approximately 14.5%.
The industry indicates that due to the lower profitability of NAND Flash compared to DRAM, international giants are actively reducing NAND Flash production.
Taking Samsung as an example, since September of this year, the reduction in NAND chip production has expanded to 50% of total capacity, focusing on products with stacked layers up to 128 layers. The goal is to accelerate destocking and stabilize prices, with plans to gradually increase prices in 2024.
TrendForcehas indicated that following Samsung’s expansion of the production reduction to 50%, other suppliers are also maintaining a restrained wafer allocation strategy. After more than half a year of production reduction in some processes and capacities, there is a structural supply shortage, providing an advantage for chip manufacturers in price control. Observing the market in the fourth quarter, there are almost no low-priced sources available for purchase. However, buyers still tend to maintain high inventory levels and continue purchasing.
Industry sources revealed that the NAND chip prices had plummeted too deeply before. Although the quarterly increase in contract prices seems substantial, there is still a distance for chip manufacturers to achieve a turnaround. It is expected that prices need to increase by another 40% to allow suppliers to cross the breakeven point. Therefore, prices are expected to be quite strong in the coming quarters.