Output Adjustment Inevitable

Western Digital’s Yokaichi fab in Japan

Amid a deepening slump in the memory semiconductor industry, Western Digital, the fourth-largest company in the global NAND flash market, has announced a further reduction in its facility investment and production.

Western Digital announced in an earnings conference call for the fourth quarter of 2022 on Jan. 31 (local time) that its annual facility investment will total US$2.3 billion in the fiscal year of 2023. This figure represented a drop of 14.8 percent from the US$2.7 billion disclosed at the third quarter earnings conference call in October 2022. In addition, it is a 28.12 percent decrease from the estimated facility investment of US$3.2 billion in 2023 announced in August 2022.

Western Digital announced that it will also reduce NAND flash wafer production to 30 percent of the present level. This marked the first time Western Digital announces a production cut.

Western Digital has a 12.6 percent share in the global NAND flash market, placing fourth after Samsung Electronics, Kioxia of Japan and SK Hynix. In addition to Western Digital, major memory manufacturers such as SK Hynix, Micron Technology of the United States and Kioxia also cut production and investment.

Samsung Electronics, the world’s No. 1 player in the global memory semiconductor market, said at an earnings conference call for the fourth quarter on Jan. 31 that its facility investment for this year will be at a level similar to that of last year. It added that the proportion of R&D investment in the total investment would rise this year. Some analysts say that the announcement implied that Samsung will actually cut production as the proportion of R&D investments will ascend.

SK Hynix announced a 50 percent cut in its facility investment in October 2022 and started to scale down production at its Wuxi plant. It announced on Feb. 1 that it would not cut investment anymore. But analysts say that the chipmaker will face trouble in its facility operation as the market situation continues to deteriorate.

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