DRAM Spot Market:

DRAM spot prices continue to fall as channel demand has been tepid. Furthermore, the decline has become sharper recently for both DDR4 and DDR5 products. At the same time, spot traders who previously accumulated stockpiles are now eager to sell because the overall demand outlook is not particularly positive. Hence, spot prices, on the whole, are weakening. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) fell by 0.77% from US$1.936 last week to US$1.921 this week.

NAND Flash Spot Market:

Continuing from last week, spot prices are lingering at an amplified degree of declination under the persistently sluggish demand from the channel market, though at a slightly lighter sales pressure compared to that of DRAM. For 512Gb wafers, concluded prices are sitting on about US$3.9, which are lower than contract prices, and indicate the yet-to-be recovered level of consumer demand. 512Gb TLC wafer spots have dropped by 1.98% this week, arriving at US$3.764.

DRAM Spot Market:

The spot market has not changed noticeably from the previous week and still lacks significant demand momentum. Therefore, spot prices of DDR4 and DDR5 chips have maintained a mostly flat to slightly downward trend. Module houses also hold a conservative demand outlook, so they have yet to actively raise the spot prices of their products.

Currently, the overall price trend remains steady due to suppliers’ efforts to limit supply and prop up prices. However, more chips will be released into the spot market in 2Q24. This supply increase will be especially noticeable for DDR5 products, and spot prices, on the whole, will probably weaken as a result. The average spot price of the mainstream chips (i.e., DDR4 1Gx8 2666MT/s) fell by 0.05% from US$1.940 last week to US$1.939 this week.

NAND Flash Spot Market:

Despite enervation from end demand, quotations for NAND Flash wafers and other related products have yet to loosen under the stimulation generated by the ongoing increment of contract prices, and prices are still somewhat being supported on the whole. Additionally, provision from suppliers has not expanded significantly, where overall price dynamics are slightly better than that of DRAM spots. 512Gb TLC wafer spots have risen by 8.26% this week, arriving at US$3.840.

With the effective reduction of production by suppliers, the price of memory is rebounding, and the semiconductor memory market finally shows signs of recovery. From the perspective of market dynamics and demand changes, NAND Flash, as one of the two major memory products, is experiencing a new round of changes.

Suppliers are in Constant Motion: Increasing Prices and Adjusting Production Capacity Utilization

Since 3Q23, NAND Flash chip prices have been on the rise for several consecutive months. TrendForce believes that, under the precondition of a conservative market demand prospect for 2024, chip price trends will depend on suppliers’ production capacity utilization.

There have been frequent developments in the NAND flash memory industry chain, with some manufacturers indicating a willingness to raise prices or increase production capacity utilization.

Wallace C. Kou, General Manager of NAND Flash Supplier SIMO, stated that prices for the second quarter of NAND Flash have already been settled down, which will increase by 20%; some suppliers have started to make profits in the first quarter, and most suppliers will earn money after the second quarter.

Pua Khein Seng, CEO of PHISON, believes that further price increases for SSD solid-state drives may significantly reduce market demand. If prices are too high, demand may begin to waver again. He suggested that NAND manufacturers stop reducing production and start meeting demand, rather than allowing low supply and high demand to push up prices.

From the perspective of the industry chain, Samsung’s Xi’an fab has significantly increased its operating rate, and Kioxia is considering adjusting its production reduction plan.

As for Samsung, Samsung Electronics’ NAND Flash fab in Xi’an, China, has restored its operating rate to around 70%, according to a report from the global media “THE ELEC”. In 2H23, Samsung lowered the operating rate of the fab to 20-30%. This is the lowest point for the fab since the decline in memory prices and demand began in late 2022.

The Xi’an fab is Samsung Electronics’ only memory semiconductor production base located outside of Korea, with a monthly production capacity of 200,000 300mm wafers, accounting for 40% of Samsung’s overall NAND output.

Samsung Electronics plans to upgrade its Xi’an NAND Flash fab to the 236-layer NAND process and kick-off large-scale expansion. It is understood that the company will gradually introduce equipment capable of producing 236-layer NAND at the Xi’an fab in 2024.

As to Kioxia, the company recently stated that it will re-evaluate the production reduction plan for memory medium flash, used in electronic devices, implemented since 2022 and ramp up production. Kioxia expects that by March of this year, the utilization rate of its NAND fab will return to around 90%, relying on demand.

However, TrendForce pointed out that the previously predicted quarter-on-quarter increase in contract prices for NAND Flash in 1Q24 is about 20-25%. Although the overall demand outlook for the second quarter is still conservative, NAND Flash suppliers have adjusted their production capacity utilization since late in 4Q23 and early 1Q24.

In addition, NAND Flash buyers have already begun to gradually replenish their inventories in the first quarter. Therefore, the quarter-on-quarter increase in contract prices for NAND Flash in the second quarter will converge to 10-15%.

Market Landscape: Samsung Still Dominates, Two Major Manufacturers May Merge

Currently, the NAND Flash market is still dominated by the five major manufacturers, with Samsung and SK Hynix accounting for the lion’s share.

As per a research from TrendForce on March 6, in 4Q23, Samsung still firmly held the top position in the NAND Flash market, with its market share increasing from 31.4% in the previous quarter to 36.6%; next was SK Group, with its market share increasing from 20.2% in the previous quarter to 21.6%.

Following them were Western Digital, whose market share decreased from 16.9% in the previous quarter to 14.5%, Kioxia, whose market share decreased from 14.5% in the previous quarter to 12.6%, and Micron, whose market share decreased from 12.5% in the previous quarter to 9.9%.

It is worth noting that Western Digital’s plan to merge with Kioxia, which has been in progress since 2021, has not yet been concluded. According to sources cited by a report from Japanese media 47news, the merger negotiations were opposed by a competitor, leading to their termination. Earlier reports from Japanese media Asahi News indicated that both parties might resume merger negotiations at the end of April.

Reportedly, Bain Capital is in talks with relevant companies to restart merger negotiations between Western Digital and Kioxia. If the merger is successful, the newly formed company will control one-third of the global NAND Flash market.

If the merger is successful, the new company founded by Western Digital and Kioxia will have a market share of over 30%, leading to a variation in the market landscape of the NAND Flash market.

Recently, Western Digital has taken action again. On March 5, the company announced that after splitting its NAND Flash business, it will retain its original name and focus on its core HDD business. It also stated that the split transaction is expected to be completed in 2H24.

In light of the announcement, Irving Tan, the current Executive Vice President of Global Operations at Western Digital, will serve as the CEO of the remaining independent HDD company, continuing to run under the Western Digital brand. The current CEO, David Goeckeler, will be transferred to the newly established company in the NAND Flash department and serve as the CEO of the new company.

The news of Western Digital’s divestiture of its NAND Flash business, which has long been plagued by oversupply, has sparked widespread discussion in the industry. However, the company believes that this move will accelerate innovation and bring new growth opportunities. At the same time, due to the independent capital structure, the operating efficiency of the two entities will be higher compared to a unified company.

Outlook: Q1 NAND Flash Industry Revenue May Increase by 20% QoQ

In terms of industry revenue, according to the latest research from TrendForce, NAND Flash industry revenue reached USD 11.49 billion in 4Q23, an increase of 24.5% from the previous quarter.

This was mainly benefited from the recovery of terminal demand due to year-end promotions, and the expansion of orders in the component market by reason of price hikes, as well as the vigorous shipment of bits compared to the same period last year. Meanwhile, companies continued to release views that demand in 2024 will perform better than in 2023, and strategic stocking has been initiated.

Looking ahead to 1Q24, TrendForce believes that with the significant improvement in supply chain inventory levels and prices still on the increase, customers continue to increase purchase orders to avoid the risk of supply shortages and rising costs.

Thereby, despite being the traditional off-season, TrendForce predicts that the industry revenue of NAND Flash in the first quarter will still increase by 20% QoQ due to the continuous expansion of order scale, which stimulates NAND Flash contract prices to increase by an average of 25%.

Read more

• [News] NAND Flash Manufacturers Kioxia and WD Reportedly Set to Resume Merger Talks in Late April
• [News] SK Hynix Rumored to Propose Collaboration with Kioxia for HBM Production in Japan

(Photo credit: Kioxia)

A glimmer of hope for the once-failed engagement between NAND flash memory giants Kioxia and Western Digital (WD) may emerge again. According to a report from Japanese media Asahi News, the two parties may restart merger negotiations in late April.

 It’s reported on February 23rd that Kioxia and WD are expected to resume merger talks in late April. Although their merger negotiations hit a snag last fall, both companies are facing pressure to expand their scale for survival. However, whether they can ultimately reach a merger agreement remains uncertain.

According to the report, both Kioxia and WD manufacture NAND Flash products. If they merge, their scale will rival that of the global market leader, Samsung Electronics. The Japanese government reportedly views the Kioxia/WD merger as a “symbol” of Japan-US semiconductor cooperation and has provided support. However, the merger negotiations hit an impasse last fall, reportedly due to opposition from SK Hynix, indirectly invested in Kioxia.

As per TrendForce’s  data for 3Q23, Samsung maintained its position as the top global NAND flash memory manufacturer, commanding a significant market share of 31.4%. Following closely, SK Group secured the second position with a 20.2% market share. Western Digital occupied the third position with a market share of 16.9%, while Japan’s Kioxia held a 14.5% market share.

Asahi News’ report further indicates that WD declared in October of last year that “all discussions had ended.” To avoid insider trading, as per the report cited sources, WD is expected to wait for a certain period before the negotiation can be resumed. Therefore, once this waiting period concludes, merger talks are set to resume in late April.

Per a report from Jiji Press on February 17th, regarding the merger proposal involving Kioxia and WD, Kioxia has proposed a collaboration with SK Hynix, which opposes the merger. Kioxia has reportedly approached SK Hynix and plans to utilize the jointly operated Japanese plants of Kioxia and WD to manufacture semiconductors for SK Hynix.

The report notes that SK Hynix and Kioxia are competitors in the NAND Flash industry. However, since 2018, SK Hynix has indirectly invested approximately 15% in the predecessor of Kioxia, “Toshiba Memory,” through the American investment fund Bain Capital. SK Hynix has consistently sought to strengthen its relationship with Kioxia since then.

Kioxia’s proposed acceptance of SK Hynix’s request to “strengthen the relationship” is seen as a gesture to persuade SK Hynix to agree to the merger proposal. The goal, as per the report, is to restart the stalled merger negotiations between Kioxia and WD.

Read more

• [News] Kioxia and Western Digital Resume Merger Negotiations? Rumors of Bain Negotiating with SK Hynix Surface

(Photo credit: Kioxia)

According to TrendForce’s latest release on memory spot prices, with no signs of loosening in contract market prices for DRAM and NAND Flash, spot prices are expected to remain relatively stable in the short term. Details are as follows:

DRAM Spot Market:
In the spot market, buyers and sellers are still mostly passive at this moment due to the celebration of the Lunar New Year. Therefore, spot prices of chips and modules have held relatively steady since before the holiday break. Currently, contract prices are showing no signs of weakening, so TrendForce expects spot prices of some DRAM products to stay mostly flat in the short term. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) rose by 0.98% from US$1.939 last week to US$1.958 this week.

NAND Flash Spot Market:
Most spot traders are still celebrating Chinese New Year, and have yet to see any significant price changes, where both wafer and SSD prices are mostly at the level prior to the holiday. With no signs of easing in contract prices, partial spot prices are also expected to be relatively sturdy in the short term. The 512Gb TLC wafer spot stayed flat this week at US$3.437.