Samsung NAND Flash Factories Reach 90% Capacity

According to industry sources on April 21, Samsung Electronics has recently raised its NAND flash production utilization rate to 90%. Previously, during the storage industry's downturn, Samsung's production rate had fallen to 60%. Multiple sources have reported that the overall factory average utilization rate has now reached 90%, with some major fabs operating at full capacity.

The end of the NAND flash downturn is becoming apparent as global semiconductor inventory has been cleared out and demand is recovering. Reports indicate that Samsung's Xi'an factory in China has seen a significant increase in its utilization rate. This facility serves as a key production base, accounting for 30-40% of Samsung's NAND flash production and influencing the company's overall output. Samsung initially increased the utilization rate of the Xi'an factory and then gradually raised the production rate of its Pyeongtaek factory.

Samsung's increase in NAND flash utilization rate highlights its successful adjustment in production. Since the first quarter of last year, Samsung began reducing production due to an oversupply of NAND flash. It is interpreted that a substantial portion of the current inventory has been depleted, achieving a supply-demand balance. An industry insider mentioned, "Some of our clients still have leftover inventory, but not to a degree that impacts the increase in utilization rate."

The surge in artificial intelligence (AI) has also significantly contributed to the recovery. As AI companies expand server infrastructure, the demand for NAND flash is increasing, particularly in the enterprise solid-state drive (SSD) market, which is revitalizing and boosting demand for NAND flash. Notably, cloud service providers in North America and China are experiencing an increase in demand for enterprise-grade SSDs and are keen to increase their inventory levels.

Samsung Electronics is reportedly negotiating with customers to raise NAND flash prices by 20% to respond to changing market conditions. Market research firm TrendForce predicts that with continued inventory decline, fixed NAND flash transaction prices in the second quarter will rise by 13-18%. The recovery in NAND flash may be reflected to some extent in Samsung's first-quarter earnings report, which will be announced on April 30. Securities analysts estimate that Samsung managed to return to profitability in the first quarter.