Introduction
Samsung Electronics, the global leader in NAND flash memory, is reportedly scaling back production at its Xi’an plant in China by over 10%. This move comes as the company seeks to protect its profit margins in the face of a persistent global NAND oversupply and a forecasted price slump in 2025.
The decision underscores the challenges facing Samsung as competitors like SK Hynix, Kioxia, and others intensify their efforts to capture market share. Here’s a closer look at the situation:
Key Points
- Production Cuts at Xi’an Plant: Samsung plans to reduce monthly output from 200,000 wafers to 170,000.
- Adjustments Beyond Xi’an: Production at Hwaseong lines 12 and 17 will also decline.
- Industry-Wide Oversupply: Global NAND oversupply continues to depress prices, prompting production adjustments across the sector.
- SK Hynix’s Contrasting Strategy: While Samsung cuts back, SK Hynix is increasing NAND production to leverage its technology advances.
- Kioxia Accelerates Investment: Japan’s Kioxia is ramping up its advanced NAND production, aiming to close the gap with market leaders.
Samsung’s Response to Market Dynamics
In recent years, Samsung has faced increasing pressure due to falling NAND prices. The oversupply situation has been a major issue, exacerbated by slowing demand in key sectors such as PCs, mobile devices, and data centers.
To stabilize the market, Samsung and other major players, including SK Hynix, Micron, and Kioxia, reduced production in 2023. These cuts helped balance supply and demand, leading to a temporary stabilization of prices. However, as global demand rebounded, Samsung increased its production to around 450,000 wafers per month.
Now, the company is scaling back again, with the Xi’an plant—the largest hub for its NAND production—set to reduce output by more than 10%. This strategic move signals Samsung’s intent to safeguard profitability amid declining margins.
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Xi’an Plant and Broader Production Cuts
The Xi’an plant plays a crucial role in Samsung’s NAND flash production strategy, contributing significantly to its market share. The planned reduction in wafer input from 200,000 to 170,000 wafers per month will affect overall capacity, with further cuts planned at other production lines in South Korea.
Samsung’s market leadership remains strong, but the decision to curtail output highlights the growing competitive pressures in the NAND market. According to TrendForce data, Samsung maintained a 35.2% share of the NAND flash revenue market in Q3 2024, ahead of SK Hynix with 20.6%.
SK Hynix’s Growth Strategy
In contrast to Samsung’s cautious approach, SK Hynix is expanding its NAND output. The company believes its advanced technology, particularly in enterprise SSDs, will give it a competitive edge. Last year, SK Hynix saw strong revenue growth in this segment, and it aims to capitalize on these gains in 2025.
Industry insiders suggest that SK Hynix’s strategy reflects confidence in its ability to navigate the challenging market conditions. By ramping up production, the company hopes to strengthen its position against competitors and capture a larger share of the enterprise market.
Kioxia Accelerates Advanced NAND Production
Adding to the competitive pressure, Kioxia, one of Japan’s leading NAND manufacturers, is fast-tracking its plans to expand production capacity. According to ZDNet Korea, Kioxia placed significant equipment orders late last year, originally scheduled for early 2024.
The company also plans to invest heavily in next-generation NAND technology during the second half of 2025. This accelerated investment is part of Kioxia’s strategy to close the technological gap with Samsung and SK Hynix. As a result, the competition in the NAND sector is expected to intensify further.
Outlook for the NAND Market
The NAND flash market remains volatile, with oversupply and fierce competition continuing to challenge profitability. While Samsung’s production cuts may help stabilize prices in the short term, the broader market dynamics suggest that competition will remain fierce.
As SK Hynix and Kioxia push forward with expansion and innovation, Samsung will need to carefully balance production levels and technological advancements to maintain its leadership position.
Conclusion
Samsung’s decision to reduce NAND flash production at its Xi’an plant highlights the ongoing challenges in the semiconductor industry. With global oversupply weighing on prices and competition heating up, the company’s strategic adjustments reflect its focus on profitability. However, with SK Hynix and Kioxia ramping up their efforts, the battle for market dominance in the NAND sector is far from over.