Samsung Electronics and SK hynix are igniting a market recovery for NAND flash, which has been slower to rebound compared to DRAM, by transitioning processes and reducing production.
On Nov. 3, industry insiders forecasted that NAND would still take more time to recover due to its higher inventory levels compared to DRAM and the limited impact from artificial intelligence demand.
Following a downturn in the memory semiconductor market that began at the end of 2021, NAND prices have fallen to the point where continued sales are leading to deficits. Due to sluggish sales of primary applications such as general servers, personal computers, and smartphones, companies are facing quarterly losses in the hundreds of billions of won.
The industry has strategized to expedite the recovery period for NAND through process transitions and downward production adjustments.
Samsung Electronics prioritizes cost and product competitiveness, planning to accelerate its cutting-edge process transition. The Pyeongtaek 1 Factory is shifting its NAND flash process from the 6th generation directly to the 8th generation, and the Xi’an Factory in China, which has recently been relieved of equipment import restrictions, is also preparing to revamp to the 8th generation.
Receiving the Verified End User (VEU) certification by the U.S. government has been encouraging, as it allows for the accelerated process transition of NAND. With this certification, products manufactured in China can be exported without separate approval procedures and validity periods for designated items. Samsung Electronics’ Xi’an factory is responsible for about 40% of total NAND production. Additionally, the company is proactively developing its latest NAND product, the V9.
SK hynix also anticipates NAND recovery to take place in the second half of next year and is focusing on improving profitability through optimized product lineup reductions. With the memory market recovery being concentrated on DRAM, SK hynix continues a conservative production approach to enhance profitability.
An SK hynix official stated, “We plan to strengthen our lineup of premium products with higher Average Selling Prices (ASP) to overcome cost reduction constraints and improve profitability,” adding, “We aim to minimize business volatility by maximizing investment efficiency through proper resource allocation.”
In response to the diversified demands for memory performance, SK hynix has revealed a road map that accelerates the development of next-generation NAND. President Kwak No-jung of SK hynix mentioned, “Utilizing NAND’s stacking technology in DRAM and achieving high-capacity NAND through post-500-layer stacking will be challenging,” and added, “We are also concurrently developing wafer bonding technology required for higher stacking and lateral scaling.” SK hynix is pushing to shift its data storage method not only to Triple Level Cell but also to Quad Level Cell and Penta Level Cell for multiple storage methods.
Industry observers expect that with the continuation of this production cut and the focus on corporate solid state drives, which are faster and emit less heat and noise compared to traditional hard disk drives, the NAND market will recover.