Stepping into the fourth quarter of 2023, the memory market is witnessing a comprehensive uptick in DRAM and NAND Flash prices. This surge, attributed to the gradual impact of companies’ production cuts and sustained robust demand in specific application markets, is poised to continue into the first quarter of the following year.

TrendForce’s analysis reveals an estimated 13-18% increase in Mobile DRAM contract prices for the fourth quarter, while eMMC and UFS NAND Flash contracts are expected to see a rise of about 10-15%. Looking forward to the first quarter of 2024, the upward trajectory in overall memory prices is anticipated to persist. The contract prices for Mobile DRAM and NAND Flash (eMMC, UFS) are expected to continue ascending, contingent on whether companies uphold a conservative production strategy and if there’s tangible consumer demand support at the end.

The memory market, coming out of its challenging phase, is not just experiencing increases in prices but is also anticipated to gain momentum from various factors contributing to its revival.

AI-Driven Surge in Smartphone Memory Capacities

According to reports from Wccftech, a notable trend in 2024 is the rise of terminal AI, now integrated into various chipsets like Snapdragon 8 Gen 3, Dimensity 9300, and Exynos 2400. Smartphones with AI demand more memory, with the expectation that Android phones featuring built-in AI will require a minimum of 20GB RAM.

While 8GB RAM remains the standard for Android phones, there are now phones in the market boasting higher RAM capacities than most laptops or PCs, though it has yet to become ubiquitous. Industry experts suggest that to smoothly execute AI image feature in the future, Android phones will need at least 12GB RAM. Considering AI applications and other features, phones will require over 20GB RAM for seamless operations.

Given that numerous Android phone brands are actively investing in AI, 2024 is poised to make AI a focal point for devices. Consequently, the industry underscores that as RAM requirements rise, hardware specifications become more crucial than ever for modern AI devices.

Noteworthy Growth in DDR5 Market Demand

Industry experts anticipate significant growth in demand for the DDR5 market, fueled by decreasing prices and the continuous improvement in companies’ yields.

As a high-value-added DRAM, DDR5 continues to garner favor from major players. Micron recent announcement of DDR5 memory based on 1β technology, boasting speeds of up to 7200 MT/s, signifies a shift toward the data center and PC markets.

Recently, Micron also introduced a 128GB DDR5 RDIMM memory utilizing 32Gb chips. This series boasts speeds of up to 8000 MT/s and is suitable for server and workstations. Employing Micron’s 1β technology, these series contribute to a 24% improvement in energy efficiency and 16% reduction in latency. Furthermore, Micron plans to launch models with speeds of 4800 MT/s, 5600 MT/s, and 6400 MT/s in 2024, with an upcoming model featuring a speed of 8000 MT/s in the future.

In terms of Samsung, it is reported to expand its DDR5 production line. Given the high value of DDR5 and its adoption in the PC and server markets, this year is considered a “year of large-scale adoption of DDR5.”

Improvement in HBM Supply Situation

Similar to DDR5, HBM, a high-value-added DRAM, has attracted significant attention this year. Fueled by the AI trend, the demand for the HBM market has surged, leading to an expansion in HBM production capacity.

TrendForce’s research indicates that looking ahead to 2024, the HBM sufficiency ratio is expected to improve, shifting from -2.4% in 2023 to 0.6%. With the AI boom driving demand for AI chips in 2023 and 2024, companies are increasing HBM capacity, anticipating a significant improvement in the HBM supply in 2024.

In terms of specifications, as the performance needs of AI chips increase, it’s anticipated that HBM3 and HBM3e will become the dominant choices in 2024. In general, with a rise in demand and the higher average selling prices of HBM3 and HBM3e compared to older versions, the revenue from HBM is expected to experience significant growth in 2024.

(Image: Qualcomm)

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This year, increasing demand for ChatGPT, along with ongoing innovations in PC and server technologies, has driven a growing market preference for high-value DRAM chips such as HBM and DDR5. Memory giants are collectively and actively positioning themselves in the production of these products.

DDR5: Micron Unveils New Products, Samsung Plans Line Expansion

The current DDR5 process has advanced to 1β DRAM. In October, Micron announced the release of DDR5 memory based on 1β technology, boasting speeds of up to 7200 MT/s. This product is now shipping to all customers in the data centers and PC markets.

Recently, Micron introduced the 128GB DDR5 RDIMM memory, utilizing 32Gb chips. With speeds of up to 8000 MT/s, it is suitable for servers and workstations. It also employs Micron’s 1β technology, and achieves a 24% improvement in energy efficiency and a 16% reduction in latency. Micron plans to launch models with speeds of 4800 MT/s, 5600 MT/s, and 6400 MT/s in 2024, with a future model reaching 8000 MT/s.

On the other hand, memory giant Samsung is committed to increasing DDR5 production capacity. Reports suggest that Samsung is planning to expand the production of high-value DRAM, investing in the infrastructure for advanced DRAM and increasing R&D spending to solidify its long-term market dominance.

Samsung, report as per KED Global News, is internally considering expanding DDR5 production lines. Given the high value of DDR5 and its adoption in the PC and server markets, this year is essentially regarded as the “year of widespread DDR5 adoption.”

HBM: Expansion Trend Begins, Significant Revenue Growth Expected

Amid the AI boom, HBM continues to gain popularity with demand supply outpacing. To meet this demand, storage giants are actively expanding production.

Recent reports indicate that companies like Samsung are planning to increase HBM production by 2.5 times. Additionally, in early November, it was reported that Samsung, to expand HBM capacity, acquired certain buildings and equipment within the Samsung Display Cheonan Factory. Samsung plans to establish a new packaging line at Cheonan for large-scale HBM production, having spent 10.5 billion Korean won on the acquisition and planning additional investments ranging from 700 billion to 1 trillion Korean won.

Micron, on the other hand, announced the official activation of its Taiwan-based Taichung Fab on November 6th. This facility will integrate advanced probe and 3D- packaging test, producing HBM3E and other products to meet the growing demand in various applications such as AI, data centers, edge computing, and the cloud.

TrendForce indicates that HBM, a memory embedded in high-end AI chips, is primarily supplied by three major vendors: Samsung, SK Hynix, and Micron. With the AI trend driving demand for AI chips, demand for HBM is also expected to increase in 2023 and 2024, prompting manufacturers to ramp up HBM production.

Looking ahead to 2024, the supply of HBM is expected to improve significantly. In terms of specifications, as AI chips demand higher performance, the mainstream for HBM in 2024 is expected to shift to HBM3 and HBM3e. Overall, with increased demand and higher average selling prices for HBM3 and HBM3e compared to the previous generation, HBM revenue is expected to see significant growth in 2024.
(Image: Samsung)

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As the memory market faces oversupply and falling prices due to declining demand in 2023, there’s a glimmer of hope when looking into their Q4 guidance. Memory prices are gradually rising, indicating a potential escape from the market’s low point. The most recent financial reports from the world’s top five companies substantiate this positive outlook.

1. Mixed Results in the Financial Reports of Top 5 Giants

From the recent financial reports of Samsung, SK Hynix, Micron, Kioxia, and Western Digital reveal a slowdown in the rate of revenue loss despite some reporting losses. Some companies express optimism, noting a gradual recovery in certain downstream demand.

Samsung: Anticipating Q4 Demand Recovery

Samsung Electronics’ Q3 financial report shows a revenue of 6.74 trillion Korean won, a YoY decrease, but with a net profit exceeding expectations at 5.5 trillion won.

During their earnings call on October 31, Samsung highlighted the uncertainty in the recovery of the storage chip market. However, they remain optimistic about increased demand in Q4, driven by year-end promotions, new product releases from major clients, and growing demand for generative AI.

SK Hynix: Positive Signs in Market Conditions

SK Hynix’s report for the Q3 2023 fiscal year indicates improving market conditions, particularly due to increased demand for high-performance memory, especially in AI-related products. DRAM and NAND flash memory sales have grown, with a significant 20%  QoQ increase in DRAM shipments. Rise of average prices also impacts the results. In the second half of the year, customers with reduced inventory are progressively increasing their procurement demands, leading to stable developments in product prices.

Micron’s performance for the Q4 2023 fiscal year shows revenue of $4.01 billion, a 40% year-on-year decrease but better than market expectations. The DRAM business accounts for 69% of revenue, with $2.8 billion in revenue, an increase in bit shipments but a decrease in average selling price. NAND Flash revenue is $1.2 billion, with an increase in bit shipments but a decrease in ASP.

Micron expects Q1 revenue for the 2024 fiscal year to reach $4.2~4.6 billion, anticipating a recovery in the storage market in 2024 and further improvement in 2025.

Kioxia: Rebound in NAND Prices

Kioxia released its financial report for July to September 2023, with revenue of 241.4 billion yen, a 3.9% decrease QoQ and a 38.3% YoY decrease. Due to a decline in demand for smartphone and PC memory chips, the operating loss was 100.8 billion yen in the Q2. However, benefiting from the improvement in storage supply-demand balance, optimized storage portfolio, and the performance of the yen exchange rate, the operating loss has improved.

Although NAND shipments have decreased, the situation has improved due to the rebound in NAND prices. NAND bit shipments decreased by approximately 13%, and NAND ASP increased by about 8%. Looking ahead to 2024, Kioxia expects NAND prices to continue to rise with the original equipment company’s production reduction strategy and customer inventory normalization. Confidence in the NAND market’s recovery is expected, especially in data centers and enterprise SSD demand, after the first half of 2024.

Western Digital: Cloud Market Continues to Grow

Western Digital announced Q1 revenue for the 2024 fiscal year, totaling $2.75 billion, a 3% increase QoQ and a 26% YoY decrease. In the end market, the decline in flash memory prices was offset by the growth in flash memory shipments, driving some business growth on a QoQ basis.

CEO David Goeckeler stated that Q1 performance exceeded expectations, with profit margins for flash memory and HDD business continuously improving. He pointed out that the consumer and end-user markets performed well, and the cloud market is expected to continue growing. With market improvement, an improved cost structure enables the company to increase profitability.

2. Changing Supply and Demand Dynamics: Some Applications Boosting

Storage companies are adapting to the market by reducing capital expenditures and adjusting inventory, leading to a more normalized market inventory. Simultaneously, increased demand in AI servers, high-performance computing, and automotive intelligence instills confidence in the market.

In the second half of the year, there are clear signs of improvement in the supply and demand dynamics of storage chips. Demand for smartphones, laptops, and new product releases is driving positive trends. Some companies are witnessing strengthened customer demand, even accepting price increases.

In the server sector, AI servers are boosting demand for high-bandwidth memory (HBM), and DDR5 adoption is accelerating. In the automotive storage sector, electric vehicles, intelligence, and networking are propelling in-car storage demand, indicating promising developments in the automotive storage market. Other applications such as big data, cloud computing, and wearable devices related to high-speed storage, reliability, and data security also present growth potential, benefiting storage companies.

3. Comprehensive Rise in Storage Chips: Is a Turning Point Near?

According to TrendForce, the global NAND Flash market has experienced a comprehensive price increase in the Q4, driven by suppliers’ active production reduction strategies in 2023. Data from TrendForce indicates a general rise in Q4 NAND Flash contract prices, with an increase of about 8-13%.

TrendForce estimates a negative annual growth rate of -2.8% for supply in 2023, the first in several years. This has pushed the overall sufficiency ratio to -3.7%, forming the basis for stabilizing NAND Flash prices in the second half. However, the sustainability of the current upward trend remains unclear due to the lack of substantial terminal demand.

If demand recovers as expected in the second half of 2024, especially with the momentum of AI-related orders for server SSDs and a cautious approach by suppliers in resuming capacity utilization, the overall sufficiency ratio is expected to be controlled at -9.4%, accelerating the balance between supply and demand, and NAND Flash prices may show an upward trend throughout the year.

For DRAM, TrendForce predicts a seasonal increase of about 3-8% in DRAM contract prices in the Q4. The continuation of this upward trend depends on whether suppliers maintain their production reduction strategy and the actual recovery of demand, particularly in the general server.

During the MTS 2024 Storage Industry Trends Seminar, TrendForce highlighted three concerns for the memory market in 2024:

(1) Despite the reduction in inventory levels, it is essential to observe whether this reduction can be sustained and effectively transferred to buyers.

(2) Anticipating a rise in production capacity, an early recovery in operational rates due to market improvements may lead to another imbalance in supply and demand.

(3) Whether the demand from various end-users will align with the expected recovery or not, particularly the sustainability of orders related to AI.
(Image: Samsung)

DRAM spot prices increased slightly this week due to supplier quotes and anticipation of 4Q23 contract hikes, stabilizing with ongoing production cuts. In NAND Flash, active pre-sales peak inquiry didn’t significantly impact transactions. Future trends depend on promotions; 512Gb TLC wafer spots experienced an increase.

DRAM Spot Market

Spot prices of DRAM chips have increased slightly since the start of this week. This is mainly because DRAM suppliers continue to raise their quotes despite the less-than-ideal demand situation. Furthermore, the certainty of price hikes for 4Q23 contracts has a positive short-term influence on spot prices. TrendForce believes that although the possibility of a sharp rise in spot prices is low, suppliers’ ongoing production cuts will ensure a relatively stable trend. The average spot price of the mainstream chips (i.e., DDR4 1Gx8 2666MT/s) rose by 1.72% from US$1.629 last week to US$1.657 this week.

NAND Flash Spot Market

Price inquiries on a number of packaged dies were once vibrant before the conclusion of the year-end sales peak, though the level of transactions have not magnified significantly due to the temporal increase of prices that is already ample. Subsequent price trends will depend on the results of seasonal promotions. 512Gb TLC wafer spots have risen by 5.68% this week, arriving at US$2.604.

According to Economic Daily News’ report, the DDR3 market is experiencing a surge in prices, with an almost 10% short-term increase. Contract prices for this quarter are expected to rise by 10% to 15%, with a continued optimistic outlook for the first quarter of next year.

Market analysts point out that global leaders like Samsung, SK Hynix, and Micron currently dominate standard DRAM and NAND Flash. Taiwan-based companies are unable to compete with them in chip production, except for module companies which have the potential to capitalize on the rebound of the DRAM and NAND market due to their advantage of low-cost inventory.

On the other hand, DDR3 production remains primarily under Taiwan’s purview, and the price surge is significant, providing substantial assistance to Taiwanese memory industry players.

Industry sources indicate that the main impetus behind the current memory market upswing stems from the continual reduction in production by major international manufacturers. With tightening capacities, they are strictly controlling shipments, displaying their determination to support the price increases.

Besides, companies like Samsung, SK Hynix, and Micron are actively venturing into AI applications, shifting their main capacity to produce high-bandwidth memory, DDR5, and other advanced areas. This shift has created room in the DDR3 market. Recent replenishment of inventories on the client end, along with a surge in orders for consumer electronics, has been witnessed.

TrendForce indicated that DDR3 prices have been steadily rising since September. The cumulative increase for DDR3 4Gb has reached nearly 10%, while DDR3 2Gb has shown a cumulative rise of 14%; regarding contract prices, TrendForce expects a robust increase of 10% to 15% for this quarter, with a continued strength forecasted for the first quarter of next year, likely to rise another 5% to 10%.

DDR3-related companies are optimistic about market developments. Etron believes that with inventory digestion coming to an end, “the cyclical bottom is over,” and they are gradually heading towards the dawn of recovery. They hold a positive outlook for significant growth in the global DRAM market next year.

ESMT, on the other hand, continues to advance the progress of their in-house products. They are continuously developing new products in DRAM, Flash, and MCP, expanding into different markets. This includes accelerating the development of 19-nanometer DRAM, achieving mass production of 28-nanometer NAND Flash, and researching niche memory products for automotive applications.

Winbond’s General Manager, Pei-Ming Chen, points out that their operations for this quarter will be better than the third quarter and they have a positive view of the DRAM market for next year.

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