The market is bottoming out, but some emerging fields are worth looking forward to
From the current performance of the memory market, overall prices have stopped declining, and some product prices have seen slight increases. These indicate a changing market atmosphere. However, it is still a long way off to consider it as a full-fledged recovery at this point. Indeed, the significant price reductions in storage products in the earlier period have already reached the cost threshold for many companies. The current slight price increases in some products cannot yet be considered as a representative trend. Whether the market can recover depends on the sales situation in the future.
Xue Ting, Marketing Director of GIGA Device Memory Division, talked about the demand growth in some emerging fields, which also brought vitality to the market. Xue Ting pointed out that home, wearable, new energy and vehicle-mounted are several hot areas that are growing rapidly nowadays. In the home market, there is a shift from optical network terminals (ONTs) serving one household to ONTs serving each room within a household. This transition will lead to a significant increase in storage demand, as there may no longer be just one ONT per household, but potentially multiple ONTs in each room. In wearable market, there has been significant growth in the past two years, both in domestic and overseas markets, particularly in India. The increasing demand for wearables has driven the growth of Flash memory requirements in this market.
NAND Flash
Automotive chips have consistently been considered a "safe haven" in this current semiconductor downturn. Wang Chunlong, director of FLAGHIP, said that from the perspective of automotive grade MCU market, the supply of MCU chips will remain tight in the second half of the year. Starting from this situation, it can also be predicted that the demand of vehicle storage market will increase in the second half of the year.
SAMSUNG Electronics' DRAM shipments in the second quarter are expected to increase by about 15% to 20% compared with the previous quarter. SAMSUNG Electronics shipments fell by about 10% in the first quarter, but are recovering in the second quarter. DRAM shipments of SK HYNIX in the second quarter are expected to increase by 30% to 50% compared with the previous quarter, which is higher than the market expectation of 20%. These situations indicate that the current memory market has passed through its most challenging period, and the market as a whole is in the process of bottoming out. Once the bottoming-out process is completed, there is a possibility of a rebound in the memory market in the second half of the year.
The strong promotion of DDR5 and HBM3 by major manufacturers suggests that it is still too early to expect a market recovery.
In order to improve the structural demand, SAMSUNG, SK HYNIX and other major manufacturers have been promoting the renewal and substitution of new generation technology products, such as the application of DDR5 in the market, hoping to improve the profitability of the company. Recently, SK HYNIX announced the completion of the development of its 5th generation 10-nanometer class technology and provided it to Intel for data center certification. SAMSUNG announced at the end of last year that it had successfully developed 16Gb DDR5 DRAM by using 12 nm process technology, and tested its compatibility with AMD.
Compared with DDR4, DDR5 has greatly improved its bandwidth speed, monolithic chip density and working frequency, and is more suitable for server products in emerging fields such as data center, metaverse and AI. The development and adoption of DDR5 memory technology offer larger profit margins and potential for higher premiums compared to DDR4. TRENDFORCE recently raised its second-quarter average fixed-transaction price forecast for the server 32 GB DDR5 from $75 to $80-90, reflecting the high demand for DDR5 compared with DDR4, a general-purpose product with large inventory.
The HBM market is also worthy of attention. Recently, the popularity of generative AI has driven the demand of HBM to increase, and SK HYNIX, SAMSUNG and other original factories have increased their investment in HBM. At present, SK HYNIX, SAMSUNG and MICRON have all launched HBM. In 2022, the market share of HBM is 50% for SK HYNIX, 40% for SAMSUNG and 10% for MICRON respectively. It is reported that in the second half of the year, with the installation of NVIDIA H100 and AMD MI300, the three original factories also plan the mass production of HBM3 with corresponding specifications.
In the future, as AI models become increasingly complex, it will stimulate greater usage of memory and simultaneously drive the growth of Server DRAM, SSD, and HBM (High Bandwidth Memory) demand. Indeed, it is worth noting that the traditional PC and server markets are still sluggish.
Qian Yu, an analyst at TRENDFORCE, pointed out that regardless of whether it is smartphones or servers, shipments in the first quarter did not meet industry expectations. In the first quarter of 2023, global smartphone shipments only reached 250 million units. The server market has also been weakened due to the downscaling of server procurement by North American CSPs. It is expected that global server shipments will also experience a decline in 2023. Despite the demand for HBM driven by AI-based servers, the share of AI-based servers in the overall global server memory contribution has not yet reached a significant scale. The weakness in terminal shipments indicates that the storage buyer's spare parts inventory digests slowly. Despite the emergence of new growth points, the new growth points are still unable to reverse the sluggish market caused by the decline in traditional PC and server demand, and the whole market still needs to depend on the operation in the second half of the year.
Although the destocking rate of parts is slow, the quantity of materials purchased by buyers is also decreasing, and this balance will be broken sooner or later. "The market recovery and price reversal from the third quarter are the psychological expectations of the storage industry for the trend of global semiconductors in the second half of the year. However, after examining the shipment status of each subdivided application, we think it is hard to say the price reversal in the solution memory contract market, depending on the market shipment status of each application in the second half of the year. However, it is not excluded that geographical political factors will be used as the reason for the original memory factory to raise prices, especially for some materials with obvious technical and product advantages, such as LPDDR5x 8533Mbps in mobile phone applications. Once this part of Micron's superior materials cannot complete the procurement behavior, there is the possibility that the other two oligarch suppliers will take the opportunity to raise prices. Therefore, we believe that the signal of the recovery of the memory market in the second half of the year is sufficient, but whether the price can really increase depends on the result of long-term negotiations between the original factory and the buyer. " Qian Yu said.
This article Source: ANJIMICROELECTRONICS
The memory market is currently undergoing a "bottoming out" phase, and there is hope for a rebound in the market in the second half of the year.-China exportsemi.com
