According to South Korean media reports, industry insiders have disclosed that Samsung Electronics has been implementing a plan to operate its entire memory production line at maximum output. The driving force behind this shift towards maximum memory production is the company's capacity, with internal forecasts suggesting a potential decline in traditional memory production capacity next year.

The primary factor contributing to the expected negative growth in memory production capacity is the "process conversion." Since the beginning of this year, Samsung Electronics has been making significant investments in HBM and has started converting its existing traditional DRAM and NAND products to state-of-the-art offerings.

In terms of DRAM, Samsung Electronics is transitioning its flagship 1a (fourth-generation 10-nanometer class) DRAM to HBM production. The company anticipates that by the end of this year, the maximum HBM production capacity will be expanded to 170,000 units per month, which will consequently make the production of 1a DRAM, excluding HBM, even more strained.

Furthermore, Samsung Electronics plans to expand the production of 1b DRAM (fifth-generation 10-nanometer class). To achieve this, the existing 1z DRAM (third-generation 10-nanometer class) process at the Pyeongtaek P2 and Hwaseong Line 15 will be converted to 1b DRAM. The goal is to secure a monthly capacity of approximately 100,000 units this year.

Regarding NAND Flash, since the first quarter of this year, the Xi'an wafer fab in China has been investing in converting the existing V6 NAND process to V8. With two production lines at the Xi'an NAND fab, the conversion began with one line. Recent reports indicate that the factory has made a breakthrough in the eighth-generation V-NAND process and has provided samples for verification to data center and smartphone manufacturers. The factory has reserved capacity for data center customers in 2025. Samsung has stated that the supply of the eighth-generation V-NAND will not fully meet the market demand in 2025, as the upgrade to 3D NAND process is driving customers to transition to the latest technology.

On the other hand, memory demand is expected to outpace supply this year. Micron, in its latest financial report, also indicated that the bit demand growth rate for DRAM and NAND in 2024 is expected to be around 10%, and the bit supply for DRAM and NAND is forecasted to be lower than demand in 2024.