In 2023, the revenue of the NAND industry fell below $40 billion, a year-on-year decrease of 33%, which is the lowest since 2016.
In the fourth quarter, the strategic production cuts by the original manufacturers began to take effect, with prices rising by 17% and a significant improvement in operating profit margin.
After a significant drop in average selling price from the second half of 2022 to the third quarter of 2023, the NAND industry recorded the lowest annual operating profit margin in ten years last year, at around -49%.
Starting from the third quarter of last year, suppliers began to reduce production to balance the market, leading to a price recovery. The production cut exceeded 30% in the fourth quarter, with a similar level expected to be maintained in the first quarter of this year.
Looking ahead to 2024, suppliers will carefully manage capacity utilization to maintain a supply shortage in the market and restore profit margins to healthy levels. It is predicted that full capacity utilization will not be achieved before the end of 2024, possibly waiting until early 2025.
Yole predicts that prices will rise throughout 2024, and the operating profit margin may turn positive in the second half of the year.
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