As South Korean memory giants Samsung and SK hynix announced their third quarter financial reports, posting a 112% and 94% year-over-year revenue growth, respectively, the threat from increasing output of Chinese rivals such as CXMT, which drives prices down, has reportedly prompted them to significantly cut back on legacy memory chip production, according to the report by the Korea Economic Daily.

According to the report, China’s ChangXin Memory Technologies (CXMT) has been ramping up the production of older chips like DDR4 and LPDDR4X, resulting in severe price pressure in legacy products.

CXMT has expanded its monthly DRAM production capacity from 40,000 wafer sheets in 2020 to 160,000 sheets. This capacity is expected to reach 200,000 sheets by year-end and 300,000 by the close of 2025, the report said.

SK hynix to Reduce DDR4 Production to 20% of Total DRAM Output

Industry sources cited by the report noted that in a recent investor relations session with Goldman Sachs, SK hynix suggested that it plans to reduce DDR4 DRAM production to 20% of its total DRAM output by the end of the year, down from 30% in September and 40% in June.

On the other hand, according to the report, in an earnings call with analysts on last week, Kim Jae-joon, executive vice president of Samsung’s device solutions (DS) division, confirmed plans to reduce production of legacy DRAM and NAND flash chips, aligning with industry expectations that chipmakers are scaling back on conventional memory output.

HBM and eSSD Emerge as the New Focus

Instead, both memory giants highlighted in their earnings call that they would shift their focus to highly profitable premium products like HBM and enterprise solid-drivers (eSSDs).

These adjustments by Samsung and SK hynix align with strong server DRAM demand driven by major tech firms like Google and China’s Baidu investing in server infrastructure, while PC DRAM sales have remained stagnant, according to the Korea Economic Daily.

According to SK hynix, as generative AI is developing into a multi-modal1 form and global big tech companies continue to invest to develop artificial general intelligence (AGI), the demand of memory for AI servers such as HBM and eSSD has grown noticeably this year. SK hynix predicts that this trend will continue next year.

According to the Korea Economic Daily, anticipating a prolonged global over supply, SK is accelerating the upgrade of its older DRAM lines in Wuxi, China, to advanced lines for producing fourth-generation 10-nanometer 1a DRAM.

While maintaining steady NAND flash production, in the meantime, SK is increasing the operation rate at its eSSD facility in Dalian, China, to nearly full capacity, according to sources cited by the report.

On the other hand, Samsung noted that in 2025, the company plans to expand the sales of HBM3E and the portion of high-end products such as DDR5 modules with 128GB density or higher for servers and LPDDR5X for mobile, PC, servers, and so on.

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• [News] SK hynix and Samsung Reportedly Step up Focus on HBM4 and CXL amid Rising Chinese Competition

(Photo credit: SK hynix)

According to TrendForce’s latest memory spot price trend report, regarding DRAM, price trends for DDR5 and DDR4 in the spot market will diverge, and DDR4 is unlikely to experience a price rebound anytime soon. As for NAND flash, Samsung’s recent notification of EOL (End of Life) for MLC products has led to a small price hike for small-capacity MLC eMMC in the spot market, though the phenomenon is likely to be temporal. Details are as follows:

DRAM Spot Price:

The spot market is showing an overall price trend similar to that of the contract market. Spot prices of DDR5 products remain relatively stable, whereas spot quotes for DDR4 products are under significant downward pressure. To avoid subsequent inventory pressure, the three major DRAM suppliers are eager to offload their DDR4 chip inventories. Hence, TrendForce forecasts that price trends for DDR5 and DDR4 in the spot market will diverge, and DDR4 is unlikely to experience a price rebound anytime soon. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) has fallen by 0.94% from US$1.905 last week to US$1.887 this week.

NAND Flash Spot Price:

The competitions of price slashing are becoming even more severe within the spot market as suppliers are rushing to cash out their inventory with the imminent arrival of Chinese New Year. It is worth noting that Samsung’s recent notification of EOL for MLC products has prompted spot traders to control their stocks and clients of industrial/automotive applications to advance in stocking activities, which led to a small price hike for small-capacity MLC eMMC in the spot market. With that said, the aforementioned phenomenon is likely to be temporal since there is still quite a bit of time before the said EOL arrives, and that market provision remains relatively ample. Spot prices will thus continue to drop as a result. Spot prices of 512Gb TLC wafers have dropped by 1.93% this week, arriving at US$2.445.

With the rapid adoption of AI applications, the demand for high-performance, reliable storage products is growing, drawing unprecedented attention to enterprise SSDs. The global SSD market is currently dominated by five major manufacturers, but as AI gains traction, Chinese enterprise SSD supply chain players are rising quickly through technical breakthroughs.

The enterprise SSD supply chain encompasses three main segments: NAND Flash memory, controller chips, and finished products. NAND Flash serves as the core storage medium and vehicle, available in formats like SLC (Single-Level Cell), MLC (Multi-Level Cell), TLC (Triple-Level Cell), and QLC (Quad-Level Cell).

The controller chip manages data read and write operations, with PCIe technology now the mainstream interface, while SATA and SAS also serve niche markets. The final product stage includes the design, production, and sales of enterprise SSDs.

Due to their significant control over NAND Flash memory, major flash manufacturers hold a dominant position in the enterprise SSD market. According to recent data from global market research firm TrendForce, the top five global enterprise SSD brands by revenue for Q2 this year are Samsung, SK Group (including SK Hynix and Solidigm), Micron Technology, Kioxia, and Western Digital. Collectively, these companies achieved revenues of $5.738 billion, reflecting a quarter-on-quarter growth of 52.7%.

At the same time, Chinese enterprise SSD manufacturers have seen notable growth in recent years, driven by technological innovation and market experience. Notable players in different segments of the enterprise SSD supply chain include Yangtze Memory, DapuStor, DERA, Union Memory, Zettastone, XITC, Memblaze, Unis Flash Memory, and HippStor.

The AI wave is driving massive demand for data storage and processing, which in turn imposes high requirements on the storage market for performance, cost-effectiveness, power efficiency, and reliability.

Domestic enterprise SSD manufacturers are racing to advance in these areas. For instance, in the field of flash memory, they are focusing on QLC technology, which can store more data within the same physical space compared to SLC, MLC, and TLC, thus meeting the high-capacity needs of big data and cloud storage applications.

In controller chip technology, the focus is on the PCIe 5.0 standard. Released by PCI-SIG in 2019, PCIe 5.0 doubles the data transfer speed of PCIe 4.0, enabling faster processing of large data volumes and boosting overall performance, which opens up significant growth potential for enterprise SSDs.

In China’s highly competitive enterprise SSD market, standing out requires more than simply obtaining high-quality NAND Flash and controller chips. Companies must integrate and optimize these components through innovative technology to ensure product performance and reliability, creating a competitive edge that differentiates their offerings from similar products.

 
(Photo credit: Yangtze Memory)

As HBM has become a key battlefield for memory giants amid the AI wave, NAND chips with more layers, which are also ideal for high-capacity solid-state drives (SSDs) used in AI data centers, are in great demand as well. According to the latest report by the Korea Economic Daily, Samsung aims to introduce the 400-layer vertical NAND by 2026 to capture a leading position in the booming AI-driven storage market.

According to the Korean media outlet, following Samsung’s current mass production of its 286-layer V9 NAND flash chips, the company’s Device Solutions division is targeting the production of vertical NAND with a minimum of 400 stacked layers as early as 2026.

Samsung’s major rival, SK hynix, is also developing 400-layer NAND, aiming to get the technology ready for mass production by the end of 2025, according to a report by etnews in August. The current HBM leader reportedly eyes the full-scale production for the 400-layer NAND to begin in the first half of 2026, which is roughly similar to Samsung’s timetable.

Samsung Develops “Dream NAND for AI” to Boost Density Per Unit Area by 1.6 Times

The report by the Korea Economic Daily notes that in conventional NAND chips, memory cells are stacked above the peripheral circuitry, which acts as the chip’s brain. However, stacking beyond 300 layers has frequently caused damage to the peripheral.

Back in 2013, Samsung was the industry’s first to introduce V NAND chips with vertically stacked storage cells to maximize capacity, the report notes.

Now, to address the issue occurred, Samsung is reportedly developing its advanced 10th-generation V NAND (V10), in which it intends to use an innovative bonding technology where cells and the peripheral circuitry are manufactured separately on distinct wafers before being bonded together.

Named by Samsung as bonding vertical NAND Flash or BV NAND, the technology is also praised by Samsung as the “dream NAND for AI,” stating that it will boost bit density per unit area by 1.6 times, according to the Korea Economic Daily.

This method is expected to support “ultra-high” NAND stacks by offering substantial storage capacity and efficient heat dissipation, which is ideal for SSDs used in AI data centers.

Roadmap for 1,000-layer NAND Revealed

Samsung is indeed ambitious as it also reveals the long-term roadmap for NANDs with more layers. According to the Korea Economic Daily, it plans to advance its stacking technology with the launch of V11 NAND in 2027, featuring a 50% increase in data input and output speed. Moreover, executives cited by the report state that the memory giant also aims to develop NAND with over 1,000 layers by 2030.

According to TrendForce’s latest research, in the second quarter of 2024, Samsung maintained its global leadership in the NAND Flash market with a 36.9% market share, up 0.2% from the previous quarter. SK Group followed with a 22.1% share, down 0.1%. Other key players include Kioxia (13.8%), Micron (11.8%), and Western Digital (10.5%).

Read more

• [News] SK hynix Reportedly Develops NAND over 400 Layers, Eyeing Mass Production Ready by 2025
• [News] Outpacing Samsung or the End of Race? Kioxia Aims 1000-layer NAND by 2027

(Photo credit: Samsung)

SK hynix Inc announced today that it recorded 17.5731 trillion won in revenues, 7.03 trillion won in operating profit (with an operating margin of 40%), and 5.7534 trillion won in net profit (with a net margin of 33%) in the third quarter this year.

According to the third-quarter financial report released today by SK hynix, the company posted record-breaking figures, including revenues of 17.5731 trillion won, an operating profit of 7.03 trillion won (with an operating margin of 40%), and a net profit of 5.7534 trillion won (with a net margin of 33%) for the third quarter of this year.

SK hynix’s financial report shows that quarterly revenues hit an all-time high, exceeding the previous record of 16.4233 trillion won in the second quarter of this year by over 1 trillion won. Both operating profit and net profit also surpassed the records set during the semiconductor boom in the third quarter of 2018, which were 6.4724 trillion won and 4.6922 trillion won, respectively.

SK hynix emphasized that the demand for AI memory continued to be strong centered on data center customers, and the company marked its highest revenue since its foundation by expanding sales of premium products such as HBM and eSSD. In particular, HBM sales showed excellent growth, up more than 70% from the previous quarter and more than 330% from the same period last year.

As sales increased mainly on highly profitable premium products, the average selling price (ASP) of both DRAM and NAND rose in the mid 10% range compared to the previous quarter, which made the company mark the highest operating profit.

While the demand of memory for AI servers such as HBM and eSSD has grown noticeably this year, SK hynix predicts that this trend will continue next year. This is because generative AI is developing into a multi-modal1 form and global big tech companies continue to invest to develop artificial general intelligence (AGI).

SK hynix also forecasts that the PC and mobile product markets, which had been slow to recover demand compared to memory for AI servers, will be on a steady growth path as well next year as AI memories optimized for each device are released.

As a result, the company will continue to focus on profitability by increasing sales centered on high value-added products based on its world-leading technology in AI memory.

In the DRAM area, SK hynix is continuing the rapid transition from existing HBM3 to 8-layer HBM3E products. The company also plans to start supplying 12-layer HBM3E products, which were mass-produced last month, in the fourth quarter as scheduled. This makes HBM sales, which accounted for 30% of total DRAM revenues in the third quarter, expected to reach 40% in the fourth quarter.

For NAND, the company plans to expand sales of high-capacity eSSD, which is rapidly increasing market demand, while focusing on investment efficiency and production optimization.

“SK hynix has solidified its position as the world’s No.1 AI memory company by achieving the highest business performance ever in the third quarter of this year.” said Kim Woohyun, Vice President and Chief Financial Officer (CFO) at SK hynix. “We will continue to maximize profitability while securing stable revenues by taking flexible product and supply strategies in line with market demand.”

(Photo credit: SK hynix)