Top 3 Memory Makers Cut CapEx, NAND Q3 Glut Expected

The rapid profit growth from high-priced High Bandwidth Memory (HBM) products is driving increased production capacity and improving supply and demand dynamics in the memory industry. Leading memory manufacturers are set to restart capital expenditures in 2024, focusing on HBM and high-priced DRAM products. Despite strong enterprise storage demand, the NAND Flash market still faces concerns of oversupply. This year, Samsung Electronics, SK Hynix, and Micron have reduced capital investments in NAND Flash compared to the past two years.

NAND Flash prices have been rising each quarter, with production capacity returning to normal levels in the second half of the year. However, the market estimates a slight oversupply in the third quarter, with price increases stabilizing.

SK Hynix, which has dominated the HBM market in recent years, reported strong revenue and profit growth in the second quarter of 2023, driven by robust sales of HBM and enterprise SSDs. HBM sales surged over 80% quarterly and more than 250% annually, while enterprise SSD sales increased by approximately 50% quarterly. SK Hynix plans to launch 60TB enterprise SSDs in 2024, with 128TB models expected in early 2025.

Despite a 15%-19% increase in NAND Flash ASP in the second quarter, SK Hynix experienced a slight decline in bit shipments, reflecting weak demand in other NAND applications not matching the price increase pace. DRAM bit shipments increased by less than 20%, with ASP growth around 15%, indicating balanced growth.

Memory manufacturers, including Samsung, SK Hynix, and Micron, plan to increase capital expenditures through 2024-2025, focusing investments on DRAM, especially HBM, a critical battleground. As a result, capital investments in NAND Flash are expected to decrease compared to 2022-2023, dropping from over 70% of total investment in 2023 to just over 60% in 2024.

Notably, despite Samsung's aggressive push into the HBM market, its NAND investment still accounts for 40%-50% of the industry's total, demonstrating its strong position and financial strength. Samsung is investing in technology and equipment, with plans to establish a NAND Flash production line at its Pyeongtaek P4 plant and deploy major equipment by the end of July.