TAIPEI CITY – Total capital expenditures in the global NAND flash industry is expected to be $22 billion in 2019, down about 2% year-over-year, says DRAMeXchange.

After an oversupply in 2018, the global NAND flash market continues to face excess capacity this year, as demand for notebooks, smartphones, servers and other end-products remains weak. NAND flash manufacturers have slowed capacity expansion by cutting capex in 2019, aiming to moderate oversupply by limiting the bit output growth.

Although total capex was cut nearly 10%, the oversupply continued last year. South Korean manufacturers cut NAND flash capex, and looking ahead to 2019, US-based manufacturers also plan to lower semiconductor equipment spending.

Influenced by adjustments in capacity expansion, 92/96-layer 3D NAND products are expected to account for about 32% of the industry’s total output by the end of 2019, while the portion of 64/72-layer products will remain over 50%, even though major manufacturers have entered the mass production of 92/96-layer 3D NAND since the fourth quarter of 2018, says DRAMeXchange. As the manufacturers slow down capacity expansion and migration to advanced process, the bit output growth of NAND flash is expected to be around 38% in 2019, significantly lower than over 45% in 2018.

Samsung’s NAND flash bit output growth is expected to be around 35%, considering the following two factors: Samsung will continue to reduce its production capacity for 2D NAND; the operating capacity will decrease compared with the end of 2018, since the 92-layer process requires more space in the fab. The slowdown in bit output growth will have great impact on global NAND flash production because Samsung's share in the NAND flash market is about 30%, according to DRAMeXchange.

SK Hynix and Toshiba/Western Digital also have a chance to see smaller bit output growth. The two companies have respectively new M15 fab and Fab 6 but also will be affected by the production reduction plan or capacity transfer to a previous-generation process. Therefore, DRAMeXchange has revised the forecast of their annual bit output growth to less than 50% and 35%, down from previous forecast of 50% and 40%, considering the weak demand outlook.

Micron's new fab in Singapore will not officially enter mass production until 2020, so the company’s wafer capacity per month in 2019 will remain flat compared to the fourth quarter of 2018. Intel plans to reach a full load capacity at its Dalian fab but does not have other capacity expansion plans. The joint bit output of Micron and Intel will grow nearly 40% in 2019, compared to 45% in 2018.

DRAMeXchange expects NAND flash prices to decline 20% sequentially in the first quarter of 2019. For the second half of the year, the price decline may be slightly moderated, considering the coming of peak season, but prices will continue to fall around 10% each quarter, says the firm.

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