NAND Prices Drop 50%, SK hynix Cuts Production by 10%

Global NAND flash memory prices have experienced a continuous decline for the past four months, driven by an oversupply in the market. In response, manufacturers have begun to scale back production to balance supply and demand, aiming to stabilize prices.

Following similar decisions by Micron and Samsung, SK hynix, another major South Korean memory chip producer, is also planning to reduce its NAND flash memory output. According to reports, SK hynix intends to cut production by 10% in the first half of this year.

SK hynix, the second-largest NAND flash producer globally after Samsung, currently has a production capacity of 300,000 wafers per month. A 10% reduction translates to a decrease of 30,000 wafers in output. This decision mirrors Micron's earlier announcement to cut NAND flash production by approximately 10%. Micron has also stated it will reduce spending on NAND production equipment and slow down the migration to smaller process nodes.

In addition to Micron, Samsung, and SK hynix, other industry giants are expected to follow suit with similar production cuts. Sources have indicated that Kioxia, another key player in the NAND flash market, is also likely to reduce its output.

Over the past year, NAND flash prices have experienced significant fluctuations, from increases to stabilizing, followed by a sharp decline. According to data from TrendForce, NAND prices saw a five-month increase starting in October 2023, but the growth rate slowed down in March 2024 and remained steady until September, when prices began to drop. In September, October, and November, month-over-month price reductions were 11.44%, 29.18%, and 29.8%, respectively. As of now, the price has fallen from 4.9 yuan in August to 2.16 yuan, marking a drop of over 50%, the lowest level since August 2015.

Looking ahead, NAND contract prices are expected to decline by 3-8% in Q4 of 2024, further eroding profitability. As a result, some product lines may shift from NAND to DRAM in 2025. The first quarter of 2025 is predicted to bring significant challenges for the NAND market, with supplier inventories continuing to rise and order demand dropping. Average contract prices are expected to fall by an additional 10-15%, and it may not be until the second half of 2025 that consumer NAND prices show signs of recovery.