In response, the supply chain has been scrambling to clear out inventory, driving down NAND Flash contract prices by 20–25% with enterprise SSD taking the brunt with prices plummeting 23–28%.
Despite manufacturers lowering prices in an attempt to drive up demand, clients are hesitant to purchase more components for fear of overstock. As a result, NAND Flash bit shipments rose by a mere 5.3% as ASP fell 22.8%.
Global NAND Flash revenue was reported to be $10.29 billion in 4Q22 — down 25% QoQ.
According to TrendForce, Kioxia and Micron both saw a reduction in production and price in 4Q22. Kioxia’s revenue plunged 30.5% due to weak demand from PC and smartphone clients and data centres readjusting their inventory.
Micron generated a quarterly revenue of $1.1 billion, which represents a staggering 34.7% QoQ drop, that has led them to reduce their capacity utilisation rate for fabs. Micron was, however, able to ship their 232-layer client SSDs in 4Q22 as scheduled, and with the 176-layer QLC enterprise SSD soon to be releases, Micron’s bit shipments are predicted to steadily improve in 2023 with their revenue climbing gradually quarter by quarter.
Samsung has continued to push high-capacity products thanks to their cost advantage, leading to an increase in total bit shipments. Nevertheless, they were unable to avoid the drop in ASP, generating revenue earnings of $3.48 billion in 4Q22, down 19.1% QoQ.
Samsung continues to hold the top position, according to TrendForce, retaining 33.8% of the market share, and currently has no plans to cut back on production.
Samsung’s competitors in the NAND Flash market have managed to ramp up production in recent years as a result of technological advancements, threatening Samsung’s position and this explains why Samsung continues to maintain capital expenditure and invest heavily in R&D, as it seeks to gain a greater advantage in technology and production capacity.
SK Group has similarly found itself affected by client destocking and the price war, posting a fourth quarter revenue of $1.76 billion, down 30.9% QoQ. Nonetheless, their bit shipments saw a quarterly increase of 6.7%, largely in part to a number of reasons: consumer electronics accounting for a higher percentage of SK hynix’s product portfolio, new smartphone products boosting demand, and enterprise SSDs being shipped on schedule.
Kioxia, Micron, Western Digital, and SK hynix will continue cutting back on production moving into 1Q23, giving them an opportunity to alleviate their current overstock situation. As a result, the drop in NAND Flash ASP should shrink to around 10–15%. Unfortunately, given that first quarters are traditionally low because of low client purchasing power, this means growth in client orders will be constrained.
TrendForce is predicting that NAND Flash revenue will see a continued decline in 1Q 23 of around 8.1%.
