NAND Market 2025: Supply Cuts and Pricing

The semiconductor industry, particularly the NAND flash sector, is currently undergoing a tumultuous and highly unpredictable phase, characterized by continuous price declines that are shaking up the marketThe big question looming as we dive into the new year is whether the state of the NAND market will improve or continue its slide into stagnationProminent players in the storage sector are grappling with these market changes, trying to navigate through these challenging waters.

As we ushered in 2025, it didn’t take long for clarity to emerge regarding the industry's course of actionIn just 20 days into the new year, a consensus has formed among the top three NAND manufacturers, signaling a collective move towards production cutsThis coordinated strategy underscores the severity of the challenges they face and their proactive approach to addressing the tumultuous conditions.

Micron Technology was the first major player to announce a reduction in NAND production, citing significant fluctuations in their business performance

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Their latest quarterly report revealed a staggering total revenue of $8.71 billion, undoubtedly impressive, indicating an 84.3% year-over-year increaseHowever, the breakdown between their DRAM and NAND segments presented a contrasting pictureWhile their DRAM revenue soared with a 20% quarterly increase, NAND sales stumbled, experiencing a 5% dropPredictive estimates suggest further declines in NAND shipments will plague Micron’s performance in the coming quarter.

In direct response, Micron's Chief Financial Officer, Mark Murphy, outlined their strategy of swiftly cutting down on capital expenditures and wafer productionThis led to a calculated reduction in NAND output by around 10%. Such decisive moves highlight Micron's adaptations to a rapidly shifting landscape.

On January 10, Samsung Electronics followed suit, announcing a substantial cut in NAND flash production at its Xi'an factory in China

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The company plans to reduce the wafer input by over 10%, which equates to an output drop from 200,000 wafers to approximately 170,000 each monthAlongside this, adjustments in production lines in Korea further illustrate Samsung's ongoing strategy to mitigate overproduction, projecting an overall reduction of about 20% in NAND capacity for the year.

This strategic pivot is noteworthy, particularly since Samsung, as a leader in the NAND market, foresaw risks associated with market saturation as early as 2023. They preemptively cut production by 20-25% that year and even entertained the notion of reallocating some production lines to DRAM, showcasing their keen awareness of the shifting market demands.

Similarly, on January 15, SK Hynix announced plans to trim its NAND output by 10% in the first half of the yearWith a monthly production capacity of 300,000 wafers, this translates to a cut of about 30,000 wafers each month

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The company's robust financial health, supported by record earnings in their latest report, illustrates their resilient business model despite the declining NAND shipments, which fell 5% quarter-over-quarter.

As anticipation builds around the NAND market, a collective effort from major players like Toshiba Kioxia, which also hinted at production cuts, shows how deeply intertwined these companies are in shaping the future of NAND flash pricing.

The ongoing price declines have led NAND prices to plummet to levels not seen since August 2015, adding to the angst in an already jittery marketThe data from TrendForce outlines a dramatic price trajectory, with NAND prices decreasing over 50% from the peak in August to November, where prices hit a record low of 2.16 yuanSuch steep declines reflect not only issues of excess supply but underline the broader implications for the industry as a whole.

Market performance has been driven by supply and demand dynamics, with consumer demand for electronic devices such as smartphones and PCs remaining notably weak

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These falling prices have created a surplus of NAND flash products that manufacturers, keen to stabilize their financial standings, are now scrambling to address through aggressive production cuts.

On another note, it is important to distinguish the types of NAND flash applications that dominate the marketConsumer-grade SSDs, which cater to mass data storage needs, exhibit less stringent performance requirements compared to enterprise-grade storage systems, which demand high-speed data access and reliabilityThe stark contrast in demand for consumer versus enterprise products further complicates the pricing landscape—but amid all this chaos, high-end NAND chip segments remain somewhat insulated from the volatility being experienced in the lower-end market.

The reshaping of the NAND market is not limited solely to pricingSignificant shifts in market share among the leading manufacturers are coming to light

For instance, since the beginning of 2023, SK Hynix has been steadily increasing its market share, while Samsung has also expanded its positionConversely, companies like Micron, Kioxia, and Western Digital have experienced declining shares, signaling a potential shift in competitive dynamics.

With SSDs performing robustly owing to their speed and efficiency—especially for high-performance computing applications—industry experts highlight that this sector could be largely buoyed by the ongoing transition from traditional hard disk drives to SSDsA perfect storm of technological advancements, notably in AI and cloud computing, promises to drive NAND demand upward while simultaneously constraining supply.

The anticipation for a market revival is centered around projections for the latter half of 2025. As noted by various industry insiders, the supply and demand imbalance caused by production cuts is expected to stabilize, permitting a gradual recovery