Samsung Electronics Plans to Reduce NAND Flash Production by 5% with A Focus on Its Xi'an, China Factory

According to BusinessKorea's April 21 report, this production cut is due to the declining demand and prices of storage chips that caused a 96% YoY drop in Samsung's net profit for Q1 2023, the lowest since the 2009 financial crisis. It is important to note these changes because they could impact the availability and pricing of Samsung's NAND Flash products in the market.

To recover from this financial slump, Samsung has made an unprecedented decision to reduce production, marking the first time since 1998 that the company has taken such action. The company has yet to disclose specific production reduction targets.

Market sources, as reported by South Korea's Chosun Ilbo, have indicated that Samsung's DRAM production cuts will be focused on its standard DDR4 DRAM while actively transitioning to DDR5 and LPDDR5 DRAM. This move will result in a reduction of total wafer input of 5-7% when compared with production levels seen in February and March 2022, with Hwaseong being the main affected campus for a period of 3-6 months beginning in Q2 2023.

Regarding the production cuts for NAND Flash, BusinessKorea reports that Xi'an Plant 1's monthly production capacity is expected to decrease by 12% to 110,000 pieces, while Xi'an Plant 2's monthly capacity will be reduced by 7% to 135,000 pieces. The Xi'an factories produce the 128-layer (V6) NAND type flash memory, accounting for 40% of Samsung's total NAND flash production.

A TrendForce analysis report released on April 19 showed that Samsung's NAND flash monthly production capacity will be adjusted to 620,000 wafers of 12-inch silicon in Q2 2023, down by 5.34% from the previous quarter.