The smartphone market is witnessing a surge in demand for NAND flash, as manufacturers’ significant production cuts have reduced inventory buildup, and the impending launch of smartphones equipped with “on-device artificial intelligence (AI)” is anticipated. This trend is expected to boost NAND prices, hastening the financial recovery of Samsung Electronics and SK hynix.

Market research firm Omdia reported on Dec. 17 that global NAND sales are projected to reach US$52.6 billion next year, a 31% increase from this year. This outlook marks a dramatic shift from this year’s 30% market contraction. In the last quarter, NAND market revenue climbed to US$9.229 billion, a 2.9% growth from the previous quarter.

NAND prices are also on the rise. The average transaction price for a generic NAND product (128Gb 16Gx8 MLC) in November was US$4.09, entering the US$4 range for the first time in nine months. Prices are expected to increase by more than 20% next year.

Western Digital, a NAND manufacturer, has already informed its clients of a price hike plan. The company announced that prices could cumulatively increase by 55% with each passing quarter. As the market recovers, other manufacturers like Samsung Electronics and SK hynix are expected to join in raising their prices.

The industry anticipates that the on-device AI market will drive NAND market growth. Starting with the Galaxy S24 series in January next year, Samsung Electronics and most manufacturers plan to embed AI directly into smartphones.

The application of on-device AI in smartphones, capable of learning, inference, and computation, is likely to significantly increase the demand for high-capacity NANDs of 256 GB or more. Additionally, the expansion of AI services by North American data center companies, leading to a general increase in server installations from next year, is also expected.

The rise in NAND prices is projected to speed up the financial improvement of Samsung Electronics and SK hynix. Although their DRAM divisions have returned to profitability, their NAND segments are still incurring losses. This year, the combined NAND losses of both companies are estimated to be close to 21 trillion won. Particularly, SK hynix experienced a greater impact due to its acquisition of Intel's NAND business.

By: DocMemory
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