YG PRESS NEWS – Navigating turbulent waters: what are the challenges and prospects in the NAND Market for 2023?

According to Yole Intelligence, part of Yole Group, in the NAND Market Monitor, deteriorating consumer confidence, alongside rising inflation and challenges in the supply chain, have negatively impacted the demand for smartphones and PCs. Original Equipment Manufacturers (OEMs), who had accumulated higher memory inventories due to COVID-related supply chain uncertainties and expectations of demand growth in the latter half of 2022, are now actively reducing their inventories and, consequently, causing a sharp decline in the demand for NAND memory.
The release of the latest server platforms from Intel and AMD has faced multiple delays, creating headwinds for server shipments and the associated demand for memory in recent quarters. Simultaneously, NAND suppliers have built up substantial inventories, as production growth related to technology has outpaced actual demand.

The combination of elevated inventories among OEMs and suppliers, along with weakening demand, pushed the market into a severe downturn starting in late Q2 2022, which continued through the first half of 2023. All NAND suppliers reported losses in Q2 2023, with average NAND supplier operating margins plummeting to -62%, down from +21% in Q2 2022.

The challenging market conditions are persisting into the second half of 2023. Consequently, suppliers have taken measures to rebalance the supply and demand dynamics. All NAND suppliers have reduced their shipments into the market, thereby increasing their inventory levels. They have also announced cuts in fab utilization and wafer production. Furthermore, all suppliers have scaled back their capital expenditure plans for 2023 and delayed their technology roadmap progression, with NAND capital expenditures expected to decrease by more than 50% year-over-year.
The inclusion of YMTC on the US Department of Commerce Entity List has severely restricted the company’s growth prospects and jeopardized its future.

The outlook for the remainder of 2023 remains uncertain, but proactive responses from suppliers are expected to result in historically low production growth. This, combined with a return to normal OEM purchasing behavior as inventory levels stabilize, offers hope for a potential NAND market recovery later in the year… For more information about this analysis, please contact us!