Amid a surge in AI demand that has led to an extreme global shortage of memory chips, Samsung Electronics Co., Ltd., the world's largest memory chip manufacturer, has adopted an aggressive pricing strategy. On January 25, according to Korean media reports, Samsung Electronics has raised the supply price of NAND flash memory by more than 100% in the first quarter of this year, a figure that far exceeds previous market expectations and highlights the severe supply-demand imbalance in the current semiconductor market. According to industry insiders cited by the media, Samsung Electronics concluded supply contract negotiations with its major clients by the end of last year and formally implemented the new pricing system starting in January. This move signals another major price adjustment in the memory market, following the earlier revelation that Dataram prices had been increased by nearly 70%. The report indicates that Samsung Electronics has already begun a new round of negotiations with customers regarding NAND prices for the second quarter, and the market widely anticipates that the upward price trend will continue into Q2. This aggressive pricing strategy reflects the intense demand for high-performance storage equipment driven by AI infrastructure development. With enterprise solid-state drive (eSSD) demand exploding due to data center expansion and "On-Device AI" pushing mobile devices and PCs towards higher-capacity storage upgrades, demand is experiencing exponential growth. However, constrained by the previously conservative industry-wide stance on capacity expansion and delays in process technology transitions, the supply side has failed to keep pace, resulting in a market situation of "high prices but no available stock." The price hikes are not a solo act by Samsung Electronics but are evolving into a collective industry-wide action. As the top two players in NAND market share, both Samsung Electronics and SK Hynix have adopted similar pricing strategies, demonstrating the strong bargaining power of leading manufacturers in a seller's market. Previously, market research firm TrendForce had predicted a NAND price increase of 33% to 38% for the fourth quarter of last year and anticipated a similar rise for the first quarter of this year. However, the actual market execution prices have completely shattered these forecasts. Overseas investment banks, including Nomura Securities, point out that even SanDisk, ranked fifth in the market, plans to raise NAND prices by 100% in the new year. An industry source stated that, mirroring the situation with Dataram, NAND manufacturers are joining the price hike bandwagon, making a comprehensive industry-wide price increase a certainty. The core of the imbalance lies in an AI-driven demand surge and rigid supply capacity constraints. On the demand side, the rapid proliferation of AI technology is not only boosting the need for high-performance storage in servers but also, with the implementation of "On-Device AI," forcing smartphone and PC manufacturers to incorporate higher-performance, larger-capacity storage media in their devices to support local AI computing. On the supply side, however, the market faces severe constraints due to rigid production capacity. Over the past year, there has been no large-scale capacity expansion in the NAND flash sector, with major manufacturers, including Samsung Electronics, maintaining a cautious investment approach. While not officially announcing production cuts, the industry consensus is that shipment growth is extremely limited. Coupled with the capacity substitution effects of process upgrades, the actual effective supply has fallen far short of the explosive speed of demand growth. The sharp volatility in memory chip prices is becoming a bottleneck for the development of the AI industry. With the dual price increases for Dataram and NAND, the cost of building AI infrastructure has risen significantly, leading to concerns that storage costs are hindering the pace of AI technology adoption. This cost pressure is inevitably being passed on to consumers. Industry observers note that not only AI data centers but also smartphone and PC manufacturers plan to increase the final selling prices of their products in response to rising memory costs. Given the long lead times required for semiconductor capacity construction, it is unrealistic to expect supply increases to stabilize prices in the short term.
Comments