NAND memory oversupply prompts chip makers to significantly cut production

Ever wondered why NVMe SSDs are so affordable or how all those affordable Chinese mid-range smartphones can integrate up to 256 GB of storage? The NAND flash chip oversupply that has been signaled together with the DRAM oversupply since late 2018 helped bring down the costs of SSDs, but NAND chip makers are not happy with this turn of events. According to TrendForce, some of the largest chip makers, including Intel, Micron and SK Hynix are looking to reduce NAND memory production in order to avoid a potential market crash. Samsung is also expected to adopt similar measures.

Earlier this year, TrendForce estimated that the NAND oversupply would lower prices for SSDs and mobile storage by up to 20% by the end of Q1. The problem resides in the rapid transition to high-capacity 64-layer and 96-layer NAND chips, while older 36-layer and 48-layer chips are still being produced. Micron and SK Hynix announced that are willing to reduce overall wafer output and older chip production, yet ramp up production for the new 64-layer, 72-layer and 96-layer chips. Intel only stated that it will take the necessary steps to decrease chip production output.

While Samsung has not yet presented any plans for its NAND memory production, the Korean must clearly be concerned about its dwindling Q1 2019 profits that have seen a 60% reduction compared to Q1 2018. Analysts attribute this reduction to factors like lower demand for flagship smartphones and low prices for DRAM and NAND chips.