SK Hynix Plans 10% NAND Flash Production Cut

Following reports of Samsung Electronics reducing production at its Korean Hwaseong 12 and 17 production lines, as well as cutting output at its Xi'an NAND Flash factory in China by 10%, South Korean media outlet The Elec now reports that SK Hynix also plans to reduce its NAND Flash production by 10% in the first half of this year.

The decline in demand for consumer electronics, including smartphones and laptops, has led to a significant oversupply of NAND Flash, causing prices to drop for four consecutive months. According to DRAMeXchange, the fixed price for general-purpose NAND Flash used in memory cards and USB drives fell from $4.90 in August 2024 to just $2.08, with monthly declines persisting.

In contrast, enterprise SSDs (eSSDs) targeting AI data centers have maintained relatively stable pricing. However, Micron recently noted a short-term drop in demand for eSSDs in AI data center applications, raising questions about the sustainability of this stability.

In response, Micron announced in December 2024 that it would cut NAND Flash wafer production by 10% to stabilize supply and support market demand recovery. The company also reduced spending on NAND production equipment and slowed the transition to more advanced manufacturing processes.

Reports have also emerged that Samsung is taking further steps to stabilize NAND Flash pricing and minimize losses in its NAND Flash business. The company has reduced output at its Xi'an factory by over 10% and is scaling back operations at its Hwaseong 12 and 17 production lines in South Korea.

Now, SK Hynix appears to be following suit with its own 10% production cut, aiming to address the ongoing supply glut.

According to the latest report from market research firm TrendForce, NAND Flash suppliers are expected to face rising inventory levels and declining orders in Q1 2025. The average contract price for NAND Flash is projected to drop by 10% to 15% quarter-on-quarter, further pressuring the industry.