Flash Memory Piles Up, Prices Face Further Collapse!

In the past two years, the epidemic has driven digital transformation, and notebook computers and servers have stimulated rapid growth in NAND flash consumption.

To meet demand, flash memory manufacturers have been aggressively expanding production capacity, accelerating process advancements, and increasing yields for products with 128 layers or more.

However, the NAND flash market situation deteriorated sharply in the second half of 2022, and purchase order demand for smartphones and laptops adjusted sharply, indicating that the NAND flash market is oversupplied and needs to be adjusted. 

Looking forward to 2023, due to the conservative attitude of various electronic consumer brands, it is difficult for the market to improve next year.

In recent months, due to the combined effects of multiple factors such as the COVID-19, most companies have faced a "dilemma". 

On the one hand, the purchasing power of the market has become increasingly weak, and on the other hand, the prices of products and foundry services have risen.

TrendForce believes that NAND flash manufacturers will do whatever it takes to maintain market share in the fourth quarter of 2022, leading to a collapse in NAND flash prices, which may drop by another 20% by then. 

Under the shadow of rising inventory pressure and tepid market demand, and yhere is still a possibility of further decline.

After SK hynix acquired Intel's flash memory business, it established a joint venture company Solidigm, which together contributed $3.615 billion in revenue, a month-on-month increase of 12.1% and a market share of 19.9%.

The merger of SK Hynix + Solidigm has changed the market structure, not only surpassing Kioxia to become the second, but also with Samsung's combined share of the flash memory market reaching 53%, making the Korean company control the flash memory again after controlling the memory market.

However, at the end of July, SK Hynix also announced an indefinite postponement of its South Korean factory expansion plan due to sluggish market demand.

The South Korean flash giant originally planned to start construction of a new factory called "M17" on a 430,000-square-meter site adjacent to the existing factory in 2023 and put it into use in 2025.

Samsung Electronics also announced the policy of "investing in equipment according to the elasticity of supply and demand". The company's semiconductor investment from January to March 2022 was 6.7 trillion won, a decrease of 21% from the same period last year and halved from the previous quarter.

Micron Technology CEO Sanjay Mehrotra also made it clear at the June earnings conference that "the amount of equipment investment in fiscal 2023 (ending in August) will be lower than the previous fiscal year...to prevent oversupply".

SUMMARY

Despite a rapid slowdown in customer orders, NAND flash chip suppliers remain reluctant to limit production or adjust upcoming capacity expansion plans, the sources said. 

This is because the price of NAND flash memory has not fallen below their variable cost, and the respective operating scale and volume performance are not the same.