South Korean semiconductor materials firms are expected to see their supply decline for the remainder of the year as memory chip makers reduce their NAND production output.

Some companies have reduced as much as over 50% of their material supply for NAND production compared to last year, sources said.

This is a direct impact of Samsung and SK Hynix reducing their NAND production output, they said.

Some of the chemicals used in NAND production are C3H2F6, C4F6, and WF6 as well as photoresist and highly selective phosphoric acid.

C3H2F6 and C4F6 gases are used in chip etching, which many advanced NAND chips go through extensively.

Chemical firm Foosung said last week that it will suspend the operation of its C3H2F6 factory starting on Monday due to inventory adjustments and output reductions by chip customers.

The company also produces C4F6 and deposition gas WF6. TMC and SK Showa Denko also produce C4F6 while SK Materials produces WF6 as well.

It is very rare for domestic chip chemical firms to halt their factories as chip companies rarely halt operations.

Photoresist and phosphoric acid productions are also expected to drop from Samsung and SK Hynix’s reductions of their NAND output.

Dongjin Semichem, the exclusive supplier of photoresist for 3D NAND to Samsung, is expected to see a significant revenue drop. The chemical firm recorded 200 billion won in revenue from photoresist sales.

Soulbrain, which supplies phosphoric acid for 3D NAND production, recorded a 19.8% drop in revenue in the second quarter.

Demand for NF3, which are used as cleaners, is also dropping, the sources said. SK Materials, Hyosung, and Air Products supply the chemicals.