NAND Flash Market Rebounds on Production Cuts and Easing Oversupply

NAND Flash Makers See Strong Recovery, Price Hikes Loom
AI Data Center Demand Surge Eases Supply Glut
Production Cuts in Early 2024 Also Bolster Market

A warm breeze is blowing through the NAND flash market. Driven by the boom in artificial intelligence (AI) data centers, demand for NAND is rebounding, while the effects of production cuts carried out in the first half of this year are beginning to show — leading to a steady improvement in corporate earnings across the sector.

Sunlight Returns to the NAND Flash Market

According to the semiconductor industry on the 16th, conditions in the NAND market have been improving rapidly. Market tracker TrendForce reported that in the second quarter, combined revenue for the world’s top five NAND brands reached $14.67 billion, up 22% from the previous quarter. Market leader Samsung Electronics posted NAND sales of $5.2 billion, a 23.8% increase from Q1. SK hynix hit a record $3.34 billion, while Kioxia and Micron followed with $2.14 billion and $2.1 billion, respectively.

With demand rebounding sharply, some analysts warn that manufacturers may soon move to raise prices aggressively. According to IT outlet WCCFTech and supply chain sources, major NAND suppliers have already stopped issuing new price quotes to customers — a move widely seen as signaling broad price hikes. Earlier this month, SanDisk, the world’s fifth-largest NAND producer, notified clients of a 10% price increase on its products.

Data Centers Drive NAND Demand Higher

The sharp recovery in the NAND market stems largely from the easing of its chronic oversupply problem. After peaking in 2021, the market fell into significant oversupply starting in 2022, worsened by weak demand for smartphones and PCs and by the fact that, unlike DRAM (dominated by three players), NAND has five major suppliers. As of Q2, market shares stood at Samsung Electronics (32.9%), SK hynix & Solidigm (21.1%), Kioxia (13.5%), Micron (13.3%), and SanDisk (12%).

Now, surging upgrade demand from AI data centers is reshaping the landscape. Data centers traditionally relied on HDDs for storage, but cloud providers are rapidly shifting to NAND-based SSDs for far faster storage and read speeds. According to Morgan Stanley, NAND supply could fall short of demand by as much as 8% next year, with the tightest shortages expected in enterprise SSDs (eSSDs).

Looking ahead, the arrival of High-Bandwidth NAND Flash (HBF) is also expected to spur demand. Similar to high-bandwidth memory (HBM), which stacks DRAM, HBF vertically stacks NAND to create a high-performance chip. When paired with HBM in AI accelerators, HBF could significantly boost overall performance. Industry forecasts suggest that HBF could see widespread deployment in AI accelerators by around 2030.

Early-Year “Production Cut Relay” Shows Results

The easing of oversupply has also been shaped by major players’ commitment to production cuts. At the end of last year, Micron formally announced reductions during its Q4 earnings release, saying it had trimmed NAND capital expenditures, slowed its technology node transitions, and cut wafer output by the mid-teens percentage range.

Other companies soon followed. In its Q4 earnings call earlier this year, SK hynix said NAND had been hit harder by slowing demand than other applications, noting that it would continue its flexible investment and production stance carried over from 2023, focusing on profitability while keeping output limited.

Around the same time, Samsung Electronics cut wafer input at its Xi’an, China plant — the world’s largest NAND facility — by more than 10%, while also scaling back production at key lines in its Hwaseong campus. Kioxia and SanDisk likewise reduced output in the first half of this year.

As supply tightened, NAND prices have been on the rise. According to TrendForce, average NAND prices are expected to climb 5–10% in Q3, slightly higher than the 3–8% increase in Q2. TrendForce noted that after production cuts and inventory reductions in the first half, the NAND market has seen a marked improvement in supply-demand balance, with memory suppliers shifting capacity toward higher-margin products and thus reducing overall volumes in circulation.