NAND flash prices plunge amid supply glut, factory output cut

Flaky demand for PCs and smartphones blamed

NAND flash prices are expected to slide due to oversupply, forcing memory chipmakers to cut production to match lower-than-expected orders from PC and smartphone manufacturers.

The superabundance of stock is putting a financial strain on suppliers of NAND flash, according to TrendForce, which says growth rate forecasts are being revised down from 30 percent to 10-15 percent for 2025.

"NAND flash manufacturers have adopted more decisive production cuts, scaling back full-year output to curb bit supply growth. These measures are designed to swiftly alleviate market imbalances and lay the groundwork for a price recovery," TrendForce stated.

Shrish Pant, Gartner director analyst and technology product leader, expects NAND flash pricing to remain weak for the first half of 2025, though he projects higher bit shipments for SSDs in the second half due to continuing AI server demand.

"Vendors are currently working tirelessly to discipline supply, which will lead to prices recovering in the second half of 2025. Long term, AI demand will continue to drive the demand for higher-capacity/better-performance SSDs," Pant said.

Commenting on the seasonal nature of the memory market, Pant told The Register: "Buying patterns will mean that NAND flash prices will remain cyclical depending on hyperscalers' buying behavior."

According to a LinkedIn post by memory distributor Memphis Electronic, flash memory prices have sunk for four months in a row, driven by a decline in purchases from key buyers such as smartphone and laptop makers, which the company claims are the main consumers of NAND flash.

The PC market has limped along since the pandemic, when the market peaked at 350 million shipments in 2021. Since then, the threat of ending support for Windows 10 and the advent of AI PCs have both failed to reignite interest among buyers at the level expected. Shipments into the channel grew by 1 percent worldwide in 2024 to 262.2 million units.

According to Canalys stats, smartphone shipments fared a little better in 2024, growing 7 percent year-on-year to 1.22 billion units globally. This followed a protracted period of stagnating growth.

Late last year, Korean memory maker SK hynix warned during an earnings call that "despite solid demand for enterprise SSDs, sales bit growth was down by mid-teen percent sequentially due to weak procurement demand from PC and mobile customers."

In terms of production plans for the near future, it added: "For NAND, we will continue to operate with the focus on technology transitions rather than capacity increases until industry inventories are sufficiently depleted."

Micron said during its Q4 earnings call in September: "Our outlook for industry NAND bit demand growth in both calendar 2024 and 2025 is now in the low double-digit percentage range, which is lower than our prior expectations."

The US-based memory biz blamed slower growth in NAND shipments for consumer devices, ongoing inventory adjustments in different end markets, and a "temporary moderation in near-term datacenter SSD purchases by customers after several quarters of very rapid growth."

Micron said the decline in the industry's NAND growth outlook for 2024 and 2025 "implies that supply actions will be necessary to achieve balance." However, it also expects to see long-term demand go up due to AI workloads where NAND is the preferred storage method.

Richard Gordon, veep and practice lead for semiconductors at The Futurum Group, told us via email:

"Seasonal weakness + inventory correction in the Mobile and PC market will cause softer demand and pricing for conventional DRAM and NAND."

With regard to memory use in the datacenter sector, he said: "as well as an inventory adjustment for SSDs, there will be a short-term slow down in demand for datacenter HBM due to uncertainty caused by export controls on AI semiconductors and other geopolitical issues."

The Futurum Group anticipates memory orders to show signs of recovery from Q2 on the back of returning demand from PC and smartphone makers, and AI infrastructure builders.

From the second half of the years, Gordon said he expects: "Better market conditions for memory vendors who will aggressively move to advanced process nodes and advanced technology in HBM3, HBM4, DDR5, LPDDR, stacked die, etc, which will soak up capacity and take it away from legacy / conventional products. The aim is to get a better balance of output and more control over ASPs."

"The dynamics of the memory market are changing a little these days, though. It is moving from a highly commoditized market with lots of competitors (and therefore highly volatile and cyclical), to a much more specialized, premium market with far fewer suppliers, far higher barriers to entry technology-wise, and therefore more control over supply and pricing. It also helps that, in the medium term at least, there seems to be insatiable demand from AI data centers." ®