[News] Samsung Reportedly to Cut NAND Production at Xi’an Plant by Over 10%

According to Chosun Biz, Samsung Electronics has reportedly decided to cut NAND flash production at its Xi’an plant in China, its largest manufacturing base for the memory chips. The move appears to be a strategic effort to protect profitability as a global NAND oversupply persists, leading to a projected sharp price decline this year. In contrast, SK Hynix is expanding its NAND supply, signaling Samsung’s acknowledgment that its current production processes may no longer sustain the dominance it once held.

Industry sources revealed on January 10 that Samsung plans to reduce NAND wafer input at the Xi’an plant by more than 10%, lowering its average monthly output from 200,000 wafers to approximately 170,000. Additionally, production at lines 12 and 17 in Hwaseong will also be adjusted downward, further reducing overall capacity.

In 2023, Samsung implemented production cuts to mitigate losses caused by the NAND oversupply, slashing wafer input by nearly half. This action, along with reductions by SK Hynix, Micron, and Kioxia, eventually stabilized NAND prices. As demand rebounded, Samsung had ramped up production to around 450,000 wafers per month.

Currently, the NAND market is highly competitive, with players like SK Hynix, Japan’s Kioxia, U.S.-based Western Digital and Micron, and China’s YMTC vying for market share. While Samsung remains the leader in production capacity and market share, intensified price competition in key sectors such as PCs, mobile devices, and servers has eroded profit margins.

According to TrendForce data, Samsung ranked first in NAND flash revenue market share in Q3 2024, capturing 35.2%. Closely following was SK Group with 20.6%.

In contrast, SK Hynix plans to gradually increase its NAND output this year, confident in its technological advances. Having demonstrated strong revenue and profitability in the enterprise SSD segment last year, SK Hynix sees this as an opportunity to gain a competitive edge over Samsung. Industry sources cited by Chosun Biz suggests that while production cuts are a logical response to oversupply and price trends, SK Hynix’s decision to expand supply highlights its confidence in securing a comparative advantage.

Kioxia Accelerates Advanced NAND Production Expansion

Meanwhile, ZDNet Korea reports that Japan’s Kioxia is ramping up its advanced NAND production capacity. The company has expedited its equipment investment plans, initially slated for early 2024, by placing orders at the end of last year. Kioxia also intends to invest in next-generation NAND in the second half of this year, aiming to close the gap with competitors like Samsung and SK Hynix. This move is expected to intensify the technological competition within the NAND industry.

(Photo credit: Samsung E&A)