The memory market is showing signs of recovery, with Japanese NAND giant Kioxia ending its production cut for NAND Flash at the end of June this year. The company’s Yokkaichi Plant and Kitakami Plant have resumed full production capacity. However, this move could influence the overall NAND market, impacting downstream memory companies like Taiwanese NAND manufacturers Phison, ADATA, Team Group and Apacer.

Citing industry sources, a report by the Economic Daily News states that with Kioxia’s capacity utilization returning to 100%, competitors like Samsung and SK Hynix may also increase their production to maintain market share. This potential surge in supply could lead to a market downturn.

Kioxia’s return to full capacity in June means that increased NAND chip production could enter the market as early as August or September, affecting the traditional peak season of downstream Taiwanese NAND controller chip manufacturers such as Phison, ADATA, and Team Group.

The report notes that Phison believes that current market conditions show strong demand for NAND chips used in SSDs. With NAND chip prices having returned to pre-pandemic levels, manufacturers are beginning to see normal profits. To compensate for losses in 2023, prices are expected to remain firm, maintaining a positive cycle.

In contrast, ADATA has a more conservative outlook on the market. The severe losses experienced by major global NAND chip suppliers in 2023 have led to an increase in production capacity and sales to recoup last year’s losses. This could result in another supply glut in the market.

TrendForce observes that restrained production increases in the first half of the year led to a rapid rebound in NAND Flash prices, helping manufacturers return to profitability. However, with significant production expansion planned for the second half of the year and retail market demand still weak, wafer spot prices are declining. The drop has been so significant that some wafer prices are now more than 20% below contract prices, making it difficult to sustain future contract price increases.

From a demand perspective, the third quarter will see continued investments in server infrastructure, particularly benefiting enterprise SSDs due to the expanding use of AI. However, consumer electronics demand remains sluggish, and with aggressive production increases by manufacturers in the latter half of the year, the sufficiency ratio of NAND Flash is expected to rise to 2.3% in the third quarter. The blended price increase for NAND Flash is projected to narrow to 5-10% quarter-on-quarter.

Read more

• Q3 Contract Prices of NAND Flash Products Constrained by Increased Production and Lower End-User Demand; Estimated to Rise by 5–10%, Says TrendForce
• [News] Kioxia Reportedly Starts 218-Layer NAND Mass Production in July with Full Utilization in June

(Photo credit: Kioxia)

Thanks to the rebound in memory chip demand amid accelerated global AI development, Samsung Electronics reported its strongest sales and profit growth in years. According to its financial guidance announced on July 5th, the semiconductor giant projects its operating profit to grow more than 15-fold YoY to 10.4 trillion won (USD 7.5 billion) in its preliminary results for the April-June quarter, outstripping market expectations.

In addition, the company expects its sales to increase by approximately 23% to 74 trillion won. According to a report from Bloomberg, this marks the largest rise since the peak levels seen during the Covid-19 pandemic in 2021.

The forecast is way better than LSEG SmartEstimate’s earlier forecast, which expected Samsung Electronics’ operating profit for Q2 2024 to reach 8.8 trillion won (roughly USD 6.34 billion).

Samsung is scheduled to release final earnings, including divisional breakdowns, on July 31.

It is also worth noting that Samsung is releasing its results just days ahead of planned three-day walkouts by union organizers, starting from July 8th. According to Bloomberg, the move would involve over 28,000 members, including those at crucial chip plants, due to a wage dispute. The extent of participation in Monday’s walkout remains uncertain at this time.

Citing market sources, the report noted that Samsung’s Q2 financial results highlight the memory market’s robust recovery this year from a sharp decline post-Covid, driven by increased demand from data centers and AI development, which contributes to a turnaround in Samsung’s largest division, which had incurred losses the previous year.

According to TrendForce, Samsung’s global share of DRAM and NAND Flash output in 2023 was 46.8% and 32.4%, respectively. An earlier report by the Korea Economic Daily indicated that Samsung’s HBM production has been sold out in 2024.

According to the latest forecast by Trendforce, the HBM market is poised for robust growth, driven by significant pricing premiums and increased capacity needs for AI chips. HBM prices are expected to Increase by 5–10% in 2025.

Read more

• [News] Samsung Establishes New HBM Team to Advance HBM3, HBM3e and HBM4 Development
• Samsung Strike Has No Immediate Impact on Memory Production, with No Shipment Shortages, Says TrendForce

(Photo credit: Samsung)

According to a report from Reuters on July 4, consensus from 27 analysts compiled by LSEG SmartEstimate indicates that driven by the surge in demand for AI technology and the resulting rebound in memory prices, Samsung Electronics’ operating profit for Q2 2024 (ending June 30) is projected to skyrocket by 1,213% from KRW 670 billion in the same period last year to KRW 8.8 trillion (roughly USD 6.34 billion), marking the highest since Q3 2022.

Other memory giants are also optimistic about the operation afterwards. Take Micron as an example. Regarding the AI frenzy, Micron CEO Sanjay Mehrotra claimed that in the data center sector, rapidly growing AI demand enabled the company to grow its revenue by over 50% on a sequential basis.”

Mehrotra is also confident that Micron can deliver a substantial revenue record in fiscal 2025, with significantly improved profitability underpinned by our ongoing portfolio shift to higher-margin products.

On the other hand, SK Group also stated that by 2026, the group will invest KRW 80 trillion in AI and semiconductors, while continuing to streamline its businesses to increase profitability and return value to shareholders.

Read more

• [News] SK Hynix to Invest USD 75 Billion in AI Push, with 80% of It Flooding into HBM
• [News] Memory Giant Micron’s 3Q24 Earnings Report Released, Outlook Slightly Better Than Expected

(Photo credit: Samsung)

According to TrendForce’s latest memory spot price trend report, the spot price of DRAM has finally seen a slight raise as supply for DDR4 and DDR5 tightens. Samsung has allocated more of its 1alpha nm production capacity to the manufacturing of HBM products, which leads to DDR5’s price increase. As for NAND flash, transactions within the spot market remain sluggish. Details are as follows:

DRAM Spot Price:

In the spot market, there has been a slight decrease in the supply of used DDR4 chips that were originally stripped from decommissioned modules. Moreover, spot prices of DDR4 chips had already dropped to a low of US$0.9 at the end of 2023, so there has been a modest rebound recently. However, there has not been a significant rebound in the demand for consumer electronics. As a result, the price increase for DDR4 chips is expected to be limited. As for DDR5 products, the supply has tightened primarily because Samsung has allocated more of its 1alpha nm production capacity to the manufacturing of HBM products. Additionally, there have been special cases of buyers requesting quotes for DDR5 products recently. Consequently, prices of DDR5 products have registered a slight rise. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) has risen by 1.07% from US$1.875 last week to US$1.895 this week.

NAND Flash Spot Price:

Transactions within the spot market are currently at a sluggish stage, and the occasional appearance of rush orders are unable to provide a support for price increases. It is worth noting that spot traders and several module houses are fighting for orders by cutting down their prices sporadically due to pressure from inventory and funds. On the whole, module houses are still actively seeking for buyer orders in the hope of seeing a need of inventory replenishment during the traditional peak season that is 3Q24. Spots of 512Gb wafers have dropped by 0.33% this week, arriving at US$3.291.

According to a Reuters report on June 26th citing sources, with semiconductor market conditions rebounding and financial performance rapidly improving, NAND flash leader Kioxia is reportedly gearing up to file a preliminary application soon and aims to debut on the Tokyo Stock Exchange (TSE) through an initial public offering (IPO) by late October.

As per the same report citing sources, Kioxia plans to formally submit its IPO application by the end of August, aiming for a listing by late October. In order to meet the deadline, preparations are proceeding at a faster pace than usual for an IPO, although the timing may be subject to progress and could potentially be delayed until December. The sources further indicated that Bain Capital, a major shareholder of Kioxia, plans to sell part of its stake through the IPO to raise funds.

Kioxia previously obtained approval for listing on the Tokyo Stock Exchange in 2020 but postponed its IPO plans due to the US-China trade tensions and adverse market conditions. The source cited in the report mentioned that the funds raised through this IPO might be lower than its initial valuation in 2020.

Toshiba spun off its semiconductor business, which focused on NAND flash, in April 2017. The company is previously named “Toshiba Memory,” which was later renamed to “Kioxia” on October 1, 2019. Toshiba currently holds approximately 40% of Kioxia’s shares.

Previously on May 15th, the improved market environment is also reflected in Kioxia’s financial report for January to March 2024, where the company achieved a net profit of JPY 10.3 billion, ending six consecutive quarters of losses.

This turnaround was driven by improved pricing due to production cuts across various NAND Flash manufacturers, which balanced supply and demand. The consolidated operating profit improved from a loss of JPY 171.4 billion in the same period last year to a profit of JPY 43.9 billion, marking the first quarterly profit in six quarters. Notably, the demand for smartphone and personal computer chips has bottomed out and is starting to recover, while orders related to data centers have increased.

Looking ahead to market trends and future prospects, Kioxia pointed out the normalization of customer inventory levels, which is expected to drive recovery in demand for PC and smartphone applications. They anticipate future growth driven by the introduction of On-Device AI, increasing memory capacities, and potential upgrades in PC operating systems stimulating replacement demand.

Read more

• [News] With Memory Market Recovering, Kioxia Has Reportedly Ceased Production Cuts and Secured Bank Lending
• [News] Kioxia Optimistic about NAND Market Sentiment; Price Hike Expected in Q2

(Photo credit: Kioxia)