Samsung, Hynix reportedly to scale down flash production

Josephine Lien, 7 August 2012

Samsung Electronics and SK Hynix will join rival Toshiba in scaling down production at their NAND flash plants to align the fall in demand with supply, according to industry sources.

Continued weakness in end-market demand for NAND flash memory will likely prompt Samsung and Hynix to cut back production by 10%, following a production cut by Toshiba at one of its Japan plants, said the sources.

Toshiba announced previously that the adjustment made to production at its Yokkaichi Operation plant (Mie Prefecture, Japan) would cut its overall NAND-chip production by approximately 30%.

Disappointing sales of USB and memory card devices have led to an oversupply of NAND flash memory, the sources indicated. Late roll-outs of new smartphones, tablets and ultrabooks are another cause giving further pressure to the chip suppliers, which have already hold excessive inventory, the sources said.

In fact, NAND flash contract prices have stopped falling recently, driven mainly by the supply side, the sources pointed out. But end-market demand remains sluggish and fails to keep up, and downstream distributors continue to hold a conservative attitude toward inventory levels, the sources said.