The storage market has always been a barometer of the semiconductor trend. Since inventory cannot be completely and strictly controlled, the storage market has been operating in a wave-like pattern. 2023 is about to pass. In the past third quarter and the fourth quarter that is about to end, the international storage market has shown a positive trend.
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South Korea's chip exports Reached US$9.5 billion in November, achieving a sharp increaseIn December, according to the latest news, the situation in the global chip market is also improving, driven by rising prices, increased demand in the field of artificial intelligence, and large shipments of new smartphones from major manufacturers.
South Korea, which has two major memory chip manufacturers, Samsung Electronics and SK Hynix, has seen its export situation improve in November.
Data from South Korea's Ministry of Trade, Industry and Energy reported that chip exports in November were US$9.5 billion, a year-on-year increase of 12.9%. After 15 months of decline since August last year, it achieved year-on-year growth for the first time.
Chips account for about 20% of South Korea's overall exports. The year-on-year increase in exports of this type of products will boost South Korea's overall exports.
Data from South Korea's Ministry of Trade, Industry and Energy show that their exports in November were US$55.8 billion, a year-on-year increase of 7.8%, marking two consecutive months of year-on-year growth.
SK Hynix surpasses Samsung in server DRAM market
According to TrendForce statistics, SK Hynix ranked first in the server DRAM market with a market share of 49.6% in the third quarter, with sales reaching US$1.85 billion. Samsung Electronics ranked second with sales of US$1.313 billion, accounting for 35.2% of the market share. The third place was Micron, with sales of US$560 million and a market share of 15.0%.
The market share calculation does not include high-bandwidth memory (HBM), which is mainly used in artificial intelligence (AI) servers. If HBM is included, the gap between SK Hynix and Samsung Electronics is estimated to be larger.
Server DRAM accounts for approximately 35%-40% of the entire DRAM market. SK Hynix’s share of the server DRAM market has surged beyond that of Samsung Electronics, mainly due to SK Hynix’s leading position in the competition of module products, including the latest standard server DRAM and the third Fifth generation double data rate memory (DDR5).
Domestic storage achieves new breakthroughs
Since the beginning of this year, domestic companies have made new breakthroughs in the two major memory chip categories (DRAM and NAND Flash).
Changxin Storage officially launches LPDDR5
On November 28, Changxin Memory officially launched the LPDDR5 series of products, including 12Gb LPDDR5 particles, POP packaged 12GBLPDDR5 chips and DSC packaged 6GBLPDDR5 chips.
Changxin Storage stated that the 12GB LPDDR5 chip has been verified on models of mainstream domestic mobile phone manufacturers such as Xiaomi and Transsion. LPDDR5 is a product launched by Changxin Memory for the mid-to-high-end mobile device market. Its marketization will further improve the product layout of Changxin Memory's DRAM chips.
The DRAM chip market has always been dominated by three overseas storage manufacturers: Samsung, SK Hynix and Micron. Donghai Securities pointed out in a research report published in September this year that in the second quarter of 2023, Samsung Electronics accounted for the global DRAM market revenue of 38.14%, SK Hynix’s market share reached 32.29%, and Micron’s market share also reached 25.03%. The market is highly concentrated. The oligopoly structure makes domestic manufacturers have very low bargaining power on DRAM chips, and also makes DRAM chips one of the basic products that are most severely restricted by external constraints in my country.
DDR5 is a high-performance memory for mobile phones and portable devices. Compared with previous versions, it transmits data faster and consumes less power. Changxin Memory has launched the first domestic high-end DRAM product, which has a positive impact on the current industry chain that is in urgent need of recovery. Said it was a benefit.
Yangtze Memory releases Zhitai brand solid state drives
In the field of NAND Flash, in September this year, Yangtze Memory's only retail storage brand Zhidao released a Ti600 solid-state drive. This product uses Yangtze Memory's original QLC flash memory particles. It is based on a self-developed architecture and has a sequential read speed of up to 7000MB/s. Provides various capacity options of 500GB/1TB/2TB.
Liu Shuwen, head of Yangtze Memory's state-of-the-art product line, said at the time that the performance and lifespan of QLC flash memory chips have been continuously optimized, and solid-state drives using them as storage media have begun to enter the retail market.
CFM flash memory market analyst Dai Xiaoyu said, "NAND Flash technology is developing into a form that can be stacked with 200 or more layers, which means that storage devices can store more data. At the same time, DRAM memory technology is also improving, manufacturing smaller Chips with smaller sizes (less than 1βnm) make them more efficient. Currently, in these two areas, domestic manufacturers are attacking towards the industry technology leadership position."
However, given the current limited availability of advanced process capacity equipment, the future expansion of domestic memory chip process capacity above 200 layers will require technological breakthroughs from domestic semiconductor equipment manufacturers.
Due to the late start of the domestic memory chip industry and lack of technology accumulation, most domestic manufacturers are focusing on niche markets and launching misaligned competition with the three storage giants. In recent years, representative memory chip design and manufacturing companies such as GigaDevice and GigaDevice Yangtze Memory, Changxin Memory, Wuhan Xinxin, etc. are gradually breaking through technical barriers in the fields of DRAM and NAND Flash. Domestic brands will continue to stir up the competitive landscape of the global memory chip market in the future.
Reduce production, destock, and increase prices
As mentioned at the beginning of the article, the storage market has always followed a wave-like development model. The main reason is that its inventory control cannot be accurate. When the market is improving, inventories rise. When the market is depressed or takes a sharp turn, the entire market begins to reduce production and destock.
That's it for 2023. After experiencing a short-term surge in demand due to the epidemic, the epidemic ended, and the ensuing market depression led to production cuts and large-scale destocking.
Samsung Electronics' third quarter report showed that the company's memory chip business achieved revenue of 10.53 trillion won, a year-on-year decrease of 31%. The semiconductor business unit (DS division) including the memory chip business had a net loss of 3.75 trillion won in the third quarter; SK Hynix achieved revenue of 9.0662 trillion won in the third quarter of fiscal year 2023, operating loss reached 1.79 trillion won, and net loss was 2.19 trillion won; Micron Technology’s fourth quarter fiscal year 2023 data shows that it achieved Revenue was US$4.01 billion, a year-on-year decrease of 39.64%, and net loss was US$1.43 billion.
Among A-shares, the performance of major listed storage companies in the third quarter was not satisfactory. GigaDevice (603986.SH) achieved revenue of 4.394 billion yuan in the first three quarters of 2023, a year-on-year decrease of 35.08%, and achieved net profit attributable to the parent company of 434 million yuan, a year-on-year decrease of 79.27%; Baiwei Storage (688525.SH) in 2023 Revenue in the first three quarters was approximately 2.122 billion yuan, a year-on-year decrease of 2.88%, and a net loss attributable to the parent company was approximately 484 million yuan; Longsys (301308.SZ) achieved revenue of 6.579 billion yuan in the first three quarters of 2023, a year-on-year decrease of 0.73%, with a net loss attributable to the parent company of approximately 484 million yuan. The net loss reached 883 million yuan.
The total losses of the five original manufacturers Samsung, SK Hynix, Micron, Kioxia and Western Digital converged from a loss of US$10 billion in Q1 to a loss of US$8.5 billion in Q2 to a loss of US$6.5 billion in Q3, with a cumulative loss of US$25 billion.
According to CFM flash memory market statistics, currently, the NAND Flash production reduction rate of major storage original manufacturers is around 30%-50%, especially for mature process products with a large proportion of production capacity. Major manufacturers are also very cautious about next year’s capital expenditure and production capacity release. Be cautious and make flexible adjustments based on inventory levels and profitability.
Ao Guofeng, an analyst at TrendForce, said that the production cuts by major international storage manufacturers are mainly aimed at removing excess storage chip inventory from the market and preventing further decline in memory chip prices. At present, this move has achieved results in the fourth quarter, and flash memory chip products have rebounded across the board this quarter.
Price Increase
Recently, there is market news that Samsung Electronics has signed purchase contracts with major customers and will increase the contract price by 10% to 25% in the fourth quarter. Among them, the SSD product with the highest price increase has a contract price increase of up to 30%. SK Hai Lux also officially announced in October that it would raise prices for DRAM and NAND flash memory chips, and Micron Technology was also exposed to follow up with price increases.
According to IDC research data, between October 23 and November 3, 2023, the overall PC market sales increased by 1.4% year-on-year. In addition, the tablet market sales increased by 13.5% year-on-year, the mobile phone market sales increased by 10.2% year-on-year, the monitor market sales increased by 5.3% year-on-year, the smart watch (excluding children's watches) market sales increased by 23.6% year-on-year, and the bracelet market increased by 15.2% year-on-year.
IDC pointed out that during this year's "Double 11" period, the demand for PCs, mobile phones, and tablets, the three major consumer electronic terminals, all experienced greater-than-expected growth, which is also one of the main reasons for driving the overall smart terminal market.
At the same time, the three major application markets of servers, smartphones, and PCs recovered in the second half of the year, but the decline in storage prices also accelerated the growth of the average capacity of terminal equipment, causing storage prices to rise.
Summary&Predictions
According to Canalys forecasts, smartphone shipments will reach 1.13 billion units in 2023 and are expected to increase by 4% to 1.17 billion units in 2024. It is expected that the smartphone market shipments will reach 1.25 billion units by 2027, with a compound annual growth rate (2023 to 2027) of 2.6%.
Also according to the latest report released by Canalys, global PC shipments are expected to return to 5% year-on-year growth in the fourth quarter of 2023 after falling for seven consecutive quarters. Canalys analyst Ben Yeh believes that the global PC market is on the road to recovery and will return to 2019 shipment levels by next year.
In terms of servers, as AI continues to heat up, DIGITIMES predicted in mid-year that high-end AI server shipments will reach 337,000 units in 2024. By 2030, the generative AI market will reach US$109 billion, with a compound annual growth rate of rate (CAGR) is 35%.
As the effects of production cuts materialize, supply and demand may reach balance in the short term. GigaDevice management said: The price of large storage is expected to continue its rebound trend. This rebound will have a certain driving effect on niche storage. The price of niche storage is also bottoming out and has a weak rebound, but it is unlikely to see a sharp rise or fall. Case.
The recovery of smartphones and PCs and the substantial growth of servers are directly beneficial to the storage industry. The storage industry may usher in a turnaround in 2024.
