The upward trend in memory prices, starting with DRAM, is now extending to NAND Flash. The combination of production cuts and recovering demand has led to a successful turnaround. There are expectations that the pace of improvement in the performance of Samsung Electronics and SK hynix will accelerate as well.
According to market research firm TrendForce on Nov. 9, Samsung Electronics is estimated to raise NAND prices by up to 10 to 15 percent in the fourth quarter of this year. There are also forecasts of an additional 10 to 20 percent increase in the first half of next year.
The actual increase in NAND prices has already begun. According to market research firm DRAMeXchange, the prices of universal 128 Gb NAND for memory cards and USB devices have risen by 1.59 percent as of October. This marks the first rebound since July 2021.
While demand recovery is still slow, production cuts have driven prices up. Suppliers have expanded production cuts to levels below cost as they cannot afford to sell at a loss. In fact, Samsung Electronics is reported to expand NAND production cuts by 40 to 50 percent by the first half of next year.
During the third-quarter earnings conference call last month, SK hynix said, “NAND inventory is higher than DRAM. We will maintain a conservative production approach for NAND for the time being.”
Additionally, there are signs of an increase in smartphone and PC shipments. According to KB Securities, it is forecasted that next year’s smartphone and PC shipments will increase by 5 percent compared to the previous year, reaching 1.2 billion units and 260 million units, respectively.
For smartphones, the anticipation is that accumulated replacement demand and the recovery of demand in the Chinese mobile market will drive an increase. As for PCs, it is expected that there will be a demand for corporate PC replacements due to the impact of the end of support for “Windows 10” in 2025.
Particularly, the ongoing semiconductor sanctions by the United States have led Chinese mobile companies to increase their stockpiles, which is viewed as a positive factor. This is supporting price increases as they expand orders.
With the rise in NAND prices following the increase in DRAM prices, there are expectations for an acceleration in the recovery of the financial performance of both Samsung Electronics and SK hynix.
Despite recording a cumulative deficit of 12.69 trillion won (US$9.68 billion) in the semiconductor sector alone until the third quarter of this year, Samsung Electronics is expected to see a significant recovery. While the consensus for this year's annual operating profit, as per the average forecast of securities firms, stands at a modest 7.23 trillion won, it is estimated to surge to 33.9 trillion won next year, representing a 368.7 percent increase.
SK hynix is also anticipated to experience a positive turnaround in its operating profit. While the consensus for this year’s operating deficit is 8.43 trillion won, the expectation for next year is a profit of 8.44 trillion won.