on January 20, amid the surge in storage demand driven by AI, two major South Korean companies, Samsung Electronics and SK Hynix, which control more than 60% of the global NAND flash memory market, are planning to further reduce their production capacity in 2026.

This decision may exacerbate the supply shortage across the entire spectrum of servers, PCs, and mobile devices, but it also indicates a significant improvement in the profit structure of major storage manufacturers.

According to reports, Samsung Electronics has lowered its projected NAND flash memory wafer production for 2026 to 4.68 million wafers, a further reduction from 4.9 million wafers in 2025.

SK Hynix has taken similar measures, with its NAND flash memory production expected to decrease from 1.9 million units in 2025 to 1.7 million units.

Industry analysts believe that Samsung and SK Hynix chose to reduce production when demand was strong mainly based on three core considerations. First, DRAM is currently far more profitable than NAND flash memory. Therefore, major manufacturers naturally prefer DRAM, which has stronger profitability, in the order of equipment investment, thus crowding out the expansion of NAND flash memory capacity.

Secondly, with the surge in demand for large-capacity SSDs from AI data centers, storage manufacturers are actively converting their production lines from the original TLC architecture to the QLC architecture, which is more suitable for large-capacity storage. The yield ramp-up during the conversion process has led to a natural reduction in production output.

In addition, in response to the rise of domestic manufacturers, Yangtze Memory Technologies Co., Ltd. (YMTC) has been continuously increasing its NAND flash memory production since 2025 and has been seizing market share with a low-price offensive.

Analysts believe that the production reduction strategy of major South Korean manufacturers is clearly targeted, namely, to defend against low-price competition from Chinese manufacturers by reducing the supply of general-purpose NAND flash memory in mobile devices and PCs.

This strategy has already had an immediate impact on prices. TrendForce predicts that NAND flash memory contract prices will surge by 33% to 38% quarter-on-quarter in the first quarter of 2026, and specifically points out that the conservative production stance of Samsung and SK Hynix is the main driver.

Data from IDC also shows that NAND flash memory supply growth is projected to be only 17% in 2026, lower than the average level in recent years.

Some analysts point out that regardless of whether Samsung and SK Hynix's NAND flash memory production cuts are a proactive strategic adjustment or a passive result of production line conversion, 2026 will be the year they reap the greatest benefits from production cuts.