According to South Korean media ETNews, as the global semiconductor recession has resolved inventory issues and demand has recovered, the NAND Flash downturn is gradually ending. Industry insiders revealed that the average operation rate of Samsung Electronics’ NAND has recently reached 90%.
This marks a significant increase compared to the 60% average operation rate during the onset of the storage downturn when Samsung Electronics began to cut production.
Sources familiar with the matter said, “The average operation rate of Samsung’s entire wafer plant has reached 90%, and some major wafer plants are actually ‘fully operational’.” It is understood that particularly, the operation rate of Samsung’s Xi’an factory in China has increased significantly. The Xi’an factory is a core production base for Samsung, accounting for 30% to 40% of Samsung Electronics’ NAND output. Samsung first increased the operation rate of the Xi’an factory and then gradually increased the operation rate at the Pyeongtaek factory.
The increase in Samsung’s NAND operation rate also indicates the effectiveness of the previous production cut strategy. Due to an oversupply of NAND, Samsung began cutting production in the first quarter of last year, stating at the time that it would do everything possible to manage inventory by minimizing facility investment and reducing operation rates. Now, according to industry insiders, a large part of Samsung’s current NAND inventory has been depleted, and supply and demand have balanced. Another industry insider stated, “Some of our clients still have excess inventory, but it has not reached a level that affects the increase in operation rates.”
The generative AI boom has also made a significant contribution to the recovery, as AI companies expand server scales, increasing the demand for NAND. In particular, the enterprise SSD market is reviving and driving NAND demand. It is reported that demand for enterprise SSDs is increasing, especially among cloud server providers in North America and China, who are notably stockpiling.
On the other hand, Samsung Electronics is negotiating with customers to raise NAND prices by 20% to cope with changes in market conditions. It is expected that the NAND recovery will be somewhat reflected in Samsung’s first-quarter financial report to be announced in 30 days. Securities analysts estimate that Samsung NAND will turn a profit in the first quarter, while DRAM had already returned to profitability in the last quarter of the previous year.
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