Despite a notable uptick in demand for artificial intelligence (AI), South Korean memory chip behemoths Samsung Electronics and SK Hynix are poised to continue trimming their NAND flash memory production throughout this year. Specifically, Samsung is set to reduce its output from 4.9 million units last year to 4.68 million units this year. Meanwhile, SK Hynix anticipates a decrease from roughly 1.9 million units to 1.7 million units. Collectively, these two industry titans command a staggering 60%-plus share of the global NAND market.

At present, the competitive landscape in inferential AI, spearheaded by companies like NVIDIA, is heating up, with a slew of new products fueling a surge in demand. The decision to cut production reflects, on one hand, a strategic reallocation of capital expenditures towards higher-margin DRAM (Dynamic Random-Access Memory). On the other hand, it also accounts for natural production losses stemming from technological transitions.

Leading market research institutions project a comprehensive upswing in NAND prices, commencing from the first quarter of this year. Supply controls may further exacerbate shortages across a myriad of sectors. In the meantime, both Samsung and SK Hynix are disbursing their largest performance bonuses in years, signaling a robust recovery in the industry. Furthermore, a substantial shift in production capacity towards High Bandwidth Memory (HBM) manufacturing is providing a dual impetus for profit growth. However, it's important to note that market risks persist, and investments should be approached with caution.