A very cyclical market, the NAND flash enterprise goes by means of increase durations and busts. After a really worthwhile increase yr in 2018, it appears just like the market is in a downtrend, as oversupply impacts the income of reminiscence producers. The three largest producers of NAND reminiscence – Intel, Micron and SK Hynix – have introduced they’ll take motion in opposition to the oversupply to stop any losses or an actual market crash begins and / or decelerate the ramp-up of latest factories. It is rather doubtless that Samsung will observe the suite.
The speedy transition to high-capacity 64-layer and 96-layer NAND storage gadgets has allowed NAND flash producers to extend their NAND provide (measured in bits) and in the end present the market with quite a lot of flash reminiscence , In the meantime, demand for servers has been weaker than anticipated in latest months, the alternative cycle for smartphones is rising and different drivers of NAND demand have additionally dissatisfied. Because of this, NAND provide has clearly outstripped demand, leading to a worth discount of as much as 20% in a number of classes within the first quarter of 2019. To make sure their short-term and long-term viability, the three producers have introduced in numerous locations in latest months to take motion to attenuate their publicity throughout this newest bust.
Micron mentioned in March that it was fastidiously managing its NAND bit progress (not less than partially to deal with the oversupply) and started lowering its complete NAND wafer launches by about 5% by chopping off its previous nodes , The corporate didn’t announce plans to scale back its NAND bit provide, however lowering reminiscence manufacturing utilizing legacy course of applied sciences is prone to scale back prices.
In the meantime, SK Hynix mentioned this week that manufacturing of 36-layer in addition to 48-layer 3D NAND reminiscence has been discontinued, which at this time causes comparatively excessive prices per bit in comparison with newer applied sciences. Within the coming months, the corporate plans to extend 72-layer 3D NAND manufacturing and, within the second half of the yr, launch 96-layer 3D NAND options for SSD and cellular markets. As well as, SK Hynix will decelerate the ramp-up of its M15 manufacturing facility in Cheongju, South Korea. The corporate expects its NAND wafer manufacturing to lower by greater than 10% in comparison with 2018. Identical to Micron, SK Hynix doesn’t appear to wish to scale back its NAND bit manufacturing, so it has extra reminiscence than final yr.
Intel, which has historically centered on the enterprise a part of the SSD market, additionally introduced this week to scale back its NAND efficiency in 2019. Intel has not said whether or not the variety of wafer begins ought to be diminished or whether or not one thing ought to be accomplished extra radical. However, the corporate continues to anticipate challenges with future pricing for NAND storage and act accordingly.
Whereas Samsung nonetheless must announce outcomes for the primary quarter of 2019, traders have already warned that quarterly earnings would lower 60% in comparison with the primary quarter of 2018. Analysts attributed this to a number of elements, together with demand for flagship smartphones, decrease costs for DRAM and NAND storage, and different weak markets. On condition that the opposite main reminiscence producers are taking all steps to deal with the present oversupply, it’s greater than doubtless that Samsung may also modify its NAND enterprise this yr. How to try this stays to be seen.