AI and big data are driving a massive demand for memory data, which also imposes higher requirements on memory technologies. Against this backdrop, the technology competition among memory giants is heating up.

In terms of NAND Flash, major companies are focusing on breakthroughs in the number of layers. Recently, The Korean Economic Daily reported that Samsung Electronics is expected to mass-produce the ninth-generation NAND Flash (V-NAND) later this month.

The company had already produced the 236-layer eighth-generation V-NAND Flash memory at scale in 2022. The upcoming ninth-generation V-NAND Flash memory will continue to use the structure of double NAND Flash stacks, with the number of layers reaching 290. According to industry predictions, Samsung’s future tenth-generation V-NAND is expected to reach 430 layers, and Samsung will switch to a three-stack structure at that time.

Looking further into the future, both Samsung and Kioxia have revealed plans to develop 1000-layer NAND Flash. Samsung aims to develop 1000-layer NAND Flash by 2030, while Kioxia plans to mass-produce 3D NAND Flash chips with more than 1000 layers by 2031.

In terms of DRAM, memory giants are zeroing in on advanced process nodes and 3D DRAM.

In March 2024, Micron disclosed in its financial result that the majority of DRAM chips are currently at the 1α and 1β advanced nodes, and the next generation 1γ DRAM will introduce EUV lithography machine, which has already undergone trial production.

Samsung’s DRAM chip technique is at the 1b nm level, and recent reports suggest that Samsung plans to start large-scale production of 1c nm DRAM within this year, using EUV technology. Samsung will also step into the era of 3D DRAM in 2025. The company has already demonstrated two 3D DRAM technologies: vertical channel transistors and stacked DRAM.

SK Hynix is also developing 3D DRAM. Last year, BusinessKorea reported that SK Hynix proposed using IGZO as the new generation channel material for 3D DRAM. According to industry sources, IGZO is a metal oxide material composed of indium, gallium, and zinc oxide. Its biggest advantage is its low standby power consumption, making it suitable for DRAM transistors requiring long lifespan. This characteristic is easily achievable by adjusting the composition ratio of In, Ga, and ZnO.

(Photo credit: Samsung)

DRAM Spot Market:

The current decline in spot prices is also one of the reasons for TrendForce’s relatively conservative forecast. Spot prices have been falling for several weeks. Apart from weak channel demand, TrendForce has also observed that memory module manufacturers are experiencing a continuous rise in inventory levels. Spot traders, on the whole, are now feeling the pressure to sell off their stocks. As a shortage of cash flow becomes more noticeable, sellers continue to cut prices in order to drive sales.

TrendForce forecasts that the gap between spot and contract prices will widen for modules. Since spot prices serve as a leading indicator for the overall price trend, this latest development is unhealthy for the market. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) fell by 0.26% from US$1.921 last week to US$1.916 this week.

NAND Flash Spot Market:

Channel traders are now holding onto an excessive amount of inventory, which led to sluggish transactions, while the lack of usual aggressive replenishment on inventory after Lunar New Year has even forced certain spot traders to start considering on the possibility of truncation. 512Gb TLC wafer spots remain unchanged in prices this week at US$3.764.

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)