At the beginning of 2025, the NAND flash memory market is experiencing a severe trough. According to DRAMeXchange data, the fixed price of general-purpose NAND flash (128Gb 16Gx8 MLC) has dropped sharply from $4.9 in August 2024 to $2.08 in early 2025, a drop of more than 57%. Behind this price plunge is a serious imbalance between supply and demand in the market, which has led to a significant reduction in the profit margins of memory chip manufacturers. How to deal with this dilemma has become the focus of attention of all parties in the industry. China Exportsemi will analyze it for you from different angles.
SK hynix's production reduction strategy: An attempt to balance supply and demand
Faced with a market environment where prices continue to fall, SK hynix announced a 10% cut in NAND flash memory production in the first half of 2025. According to TheElec, SK hynix's production capacity of 300,000 wafers per month will be reduced by about 30,000 pieces. This decision is intended to reduce supply in the market, alleviate the situation of oversupply, and at the same time create conditions for prices to recover. This strategy is not only a direct response to the current market pressures, but also an attempt to find a balance between profit protection and market share maintenance.
SK hynix's actions also reflect the consideration of long-term market trends. In recent years, the NAND flash memory industry has faced dual pressures of technology iteration and price fluctuations, and enterprises have adjusted production to maintain financial health, aiming to win more initiative for future technology research and development and market expansion.
Figure: The NAND flash memory industry will usher in an inflection point in early 2025
Peer dynamics: production reduction has become an industry consensus
SK hynix's production cut is not an isolated incident. Memory chip giants such as Micron, Samsung, and Kioxia have taken similar measures:
1. Micron: In the second half of 2024, due to poor financial performance, it took the lead in announcing production adjustments to cope with the weakening of market demand.
2. Samsung Electronics: The NAND flash memory plant in Xi'an cut monthly production from 200,000 to 170,000 units, a reduction of more than 10%. At the same time, production lines 12 and 17 in Hwaseong, South Korea, were also adjusted.
3. Kioxia: From October 2024, we will cut wafer production at our Japanese factories by 30% to alleviate the pressure on corporate operations from inventory overhangs.
The collective production reduction of industry giants shows that enterprises are actively regulating the production rhythm to maintain market stability in the face of oversupply. Although this move may have an impact on corporate earnings in the short term, it will help the industry to recover and develop healthily in the long run.
Enterprise SSD Market: Relatively Stable Demand Highlights
While the consumer NAND flash memory market has been hit hard, the enterprise solid-state drive (SSD) market has shown relative stability. Citi analyst Peter Lee pointed out that SSDs are more suitable for high-performance computing applications such as AI training because they are 40 times faster than traditional hard disk drives (HDDs). The world's top technology companies are accelerating the transformation of data centers from HDDs to SSDs, which provides some support for the enterprise NAND flash memory market.
However, it remains to be seen whether this stability can be sustained. With the popularization of AI, 5G and other technologies, the growth of demand for memory chips may accelerate, but this also requires enterprises to make further efforts in technological innovation and production efficiency improvement. In addition, the rise of next-generation storage technologies (such as ReRAM, MRAM, etc.) may have a disruptive impact on the NAND flash memory market landscape.
Short-term and long-term effects of supply and demand regulation
The production reduction strategy of memory chip manufacturers has had a multi-level impact on the supply and demand relationship of the industry:
1. Short-term effects: By reducing production, companies reduce inventory pressure, mitigating the risk of further price declines, and helping to stabilize market sentiment.
2. Long-term challenges: Reduced production could limit companies' investment in new technology research and development, while weakening their market competitiveness. In addition, the synergistic relationship with the upstream and downstream supply chains may be affected to a certain extent, and enterprises need to explore more flexible cooperation models to cope with demand fluctuations.
Industry analysts pointed out that memory chip companies need to be wary of the cyclical trap of "production reduction, price increase, and re-expansion" to avoid over-reliance on short-term price rebound. Only through technological innovation and optimization of product portfolio can we occupy a favorable position in the long-term market competition.
Industry outlook: innovation-driven and win-win cooperation
Looking ahead, the memory chip market is still full of opportunities and challenges. On the one hand, emerging technologies such as AI, cloud computing, and autonomous driving continue to drive the demand for high-performance storage. On the other hand, the pressure brought about by the imbalance between supply and demand in the market and the iteration of technology requires enterprises to remain sharp and plan ahead of time.
To cope with these changes, companies should adopt the following strategies:
1. Strengthen technology research and development: Accelerate the iteration of higher-density, lower-power NAND flash memory technology to meet market demand.
2. Optimize product mix: Focus on high-value products, such as enterprise-class SSDs and AI-specific storage, to improve overall profitability.
3. Strengthen industry collaboration: Through cross-enterprise cooperation, we will jointly respond to market changes and promote the healthy development of the industry ecosystem.
Overall, although the production cuts of SK hynix and other companies have played a certain role in the balance of market supply and demand in the short term, in the long run, the development of the memory chip industry still needs to rely on technological innovation and industrial collaboration. In the future, how to seize opportunities in emerging fields such as AI and 5G will become the key to determining the competitiveness of enterprises and industries.
