NAND manufacturers are apparently looking to cut SSD production, driving shortages and aiming to reach profit margins similar to those of their DRAM lines.
Samsung & SK hynix Look to Cut NAND Production, to Divert Resources Towards the "More Profitable" DRAM Segment
Well, after DRAM, it appears the NAND sector is in for a difficult time, especially since both technologies share common suppliers and, in the AI frenzy, they aim to maximize profitability. According to a report by Chosun Biz, Samsung and SK hynix are looking to cut NAND production, claiming that, given the current DRAM demand, manufacturers find it more profitable to divert resources from NAND production lines. Both Samsung and SK hynix have lowered their NAND production forecasts for this year, and while the AI sector won't be influenced much, consumers could see the effects soon.
Interestingly, this report comes after NAND chips have become an integral part of the AI supply chain, especially following the unveiling of NVIDIA's ICMS platform, which focuses on expanding the KV cache for agentic AI systems to maintain extensive context logs. The Rubin platform is expected to take up a decent chunk of global NAND output, as rack solutions alone could consume 115.2 million TB of NAND storage by 2027, putting immense pressure on the supply chain.
Given that NAND production is being cut by manufacturers, the intention would likely be to raise contract prices to ensure the resources dedicated to the production lines yield maximum profits. And, given that AI giants like NVIDIA, AMD, and others have their NAND supply locked for several quarters ahead, the ultimate burden would come on the consumer segment once again, replicating a scenario similar to what we have seen with the memory shortages.
SSD prices have already increased massively in the past few months, and given that agentic systems are becoming the new norm, the need for NAND platforms will only rise hereon, creating a "supply squeeze" that could eventually be disruptive for the industry.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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