Chinese smartphones aid in NAND prices rebound

Daniel Chiang, Taipei, DIGITIMES Asia 0

Credit: Samsung

As NAND Flash prices gradually rebound, Samsung Electronics has also begun to increase production, with reports indicating that the utilization rate of its Xi'an factory in China has returned to around 70%, helping alleviate the burden on upstream raw material and component suppliers.

According to South Korean media Theelec, industry sources have stated that the utilization rate of Samsung's Xi'an factory has exceeded 70%, mainly due to factors such as the patriotic consumption trend in China and increased sales of domestic smartphones.

The Xi'an factory is Samsung's sole overseas memory production facility, with a monthly capacity of 200,000 wafers based on 12-inch wafers, accounting for 40% of Samsung's total NAND output. It is currently transitioning to the 236-layer NAND process.

It is reported that in response to the deteriorating memory market conditions, Samsung lowered the utilization rate of the Xi'an factory to 20-30% in the second half of 2023. With inventory adjustments, the utilization rate is gradually increasing. This wave of increased production by Samsung is expected to drive revenue growth, and there is a turning point in the long-term downturn atmosphere for South Korean raw material and component suppliers.

Industry insiders in the semiconductor component sector state that customers demand higher inventory levels, leading to a slight growth in NAND component shipments compared to 2023. Material suppliers also note that the shipment volume of NAND materials from companies like Dongjin Semichem and SoulBrain has increased.

Additionally, with the expansion of the market for YouTubers and other similar professions, the demand for Solid-State Drives (SSDs) has become one of the key factors for Samsung and SK Hynix to clear their NAND inventories, even emphasizing design and marketing.

According to South Korean media Money Today, since semiconductor products for computers or mobile devices directly interact with consumers, design, usability, and weight need to be considered. Therefore, Samsung is establishing separate design divisions for SSD and other terminal semiconductor products, similar to its computer and smartphone businesses.

Generally, the higher the performance of an SSD, the larger the NAND capacity it requires. As consumer demand for high-definition content creation and editing expands, the SSD market is also growing gradually, driving major players to clear their NAND inventories.

Research firm Omdia predicts that the global consumer SSD market will increase from KRW11 trillion (approximately US$8.4 billion) in 2023 to KRW15 trillion in 2024 and reach KRW19 trillion in 2025.

It is reported that SK Hynix has not followed Samsung in increasing production, and its NAND business still maintains a reduction stance, leading some to worry that Samsung's NAND production increase may lead to another deterioration in prices.