Supply Tight but 2nd Largest Company Fire... NAND Prices Rise

Following Samsung Electronics, Kioxia, the world's second-largest NAND flash manufacturer, experienced a fire last week, causing NAND prices to rise.

Samsung Electronics Hwaseong Campus Photo by Yonhap News

[Asia Economy Reporter Changhwan Lee] Following Samsung Electronics, the world’s second-largest NAND flash company, Kioxia (formerly Toshiba), experienced a fire incident, causing NAND flash spot prices to surge.

With NAND flash supply already tight, the rise in spot prices is expected to lead to an increase in fixed prices soon. The price hike is also anticipated to contribute to improved earnings for domestic semiconductor companies such as Samsung Electronics and SK Hynix.

According to market information firm DRAMeXchange on the 14th, the spot price of 3D 256Gb TLC (Triple Level Cell) NAND flash closed at $3.17 on the 13th. This marks an approximately 4% increase compared to $3.05 recorded a week earlier.

NAND flash is a memory semiconductor used to store data in smartphones, PCs, and other devices. Among these, 3D 256Gb TLC is one of the main products of Samsung Electronics and SK Hynix.

The jump in NAND flash spot prices within a week is attributed to a fire that broke out on the 7th at part of Kioxia’s semiconductor plant in Yokkaichi, Japan.

According to foreign media, the fire occurred at Kioxia’s latest facility producing 64-layer and 96-layer 3D NAND flash. Although the fire was not large, smoke contamination in the cleanroom is expected to require about two weeks for restoration.

If the plant cannot operate properly for two weeks, it is analyzed that production will be disrupted for products accounting for about 4% of Kioxia’s quarterly output and about 1% of global production.

As demand surges amid concerns over future supply shortages, NAND flash spot prices are rising. NAND flash prices also increased during Kioxia’s power outage incident in mid-last year and Samsung Electronics’ power outage at the end of last year.

Seungwoo Lee, a researcher at Eugene Investment & Securities, stated, "The semiconductor spot price increase trend is continuing due to Samsung Electronics’ power outage and Kioxia’s fire incident occurring between the end of last year and the beginning of this year," adding, "As anxiety over supply grows, the upward momentum of memory spot prices is gaining strength."

The rise in spot prices is highly likely to trigger an increase in fixed prices. Semiconductor companies trade with clients at fixed prices, so a rise in fixed prices is essential for earnings improvement.

Major clients such as Google, Apple, and Amazon have been actively expanding data centers in recent years, and with the emergence of new technologies like artificial intelligence (AI), 5th generation mobile communication (5G), virtual reality (VR), and the Internet of Things (IoT), demand continues while supply is lagging, increasing the likelihood of price hikes.

Some expect NAND flash fixed transaction prices to rise by about 30-40% in the second half of this year compared to the second half of last year. Global market research firm IC Insights also forecasts NAND flash growth of about 19% year-over-year this year.

Jaeyoon Lee, a researcher at Yuanta Securities, explained, "This year, while suppliers’ production capacity is expected to shrink, demand growth rate is projected to expand compared to last year, increasing the possibility of semiconductor supply shortages," adding, "Samsung Electronics and SK Hynix are expected to achieve substantial earnings improvements."

This content was produced with the assistance of AI translation services.