Amid the rising memory market prices and the continuously improving supply-demand balance, original manufacturers (OEMs) have seen their business performance steadily climb, generally achieving a turnaround from losses to profits.

Meanwhile, memory module manufacturers have also enjoyed rapid growth in their performance. With strong support from AI, memory manufacturers are optimistic about future market conditions, with some even stating that 2025 will be a significant upward cycle year for the memory industry.

• OEM and Module Manufacturers Recorded Strong Financial Results

Recently, two OEMs, Micron and Winbond, have disclosed their latest financial data.

Micron’s financial report for the period from March to May 2024 shows that the company’s revenue for the quarter was USD 6.811 billion, an 81.5% increase YoY. Non-GAAP operating income was USD 941 million, and net income was USD 702 million, a 47% increase QoQ. Specifically, Micron’s DRAM revenue was approximately USD 4.7 billion, a 13% increase QoQ, while its NAND business revenue was approximately USD 2.1 billion, a 32% increase QoQ.

The average selling prices (ASP) for both DRAM and NAND increased by more than 20% QoQ. Micron stated that its revenue, gross margin, and earnings per share for the quarter exceeded the upper limit of its guidance range. Looking ahead to next quarter, Micron expects its revenue to reach USD 7.4-7.8 billion.

Winbond’s self-clearing revenue report for June 2024 shows that consolidated revenue for June was TWD 7.378 billion, a 5.56% increase YoY; the cumulative consolidated revenue for January to June was TWD 41.605 billion, a 14.53% increase YoY.

In terms of memory module manufacturers, companies such as Adata, Phison, and Team Group all reported year-on-year revenue growth for June and the first half of the year. Adata’s revenue for June reached TWD 2.954 billion, a year-on-year increase of over 29.38%, with a cumulative consolidated revenue of TWD 20.91 billion for the first half of this year, up by 48.56% YoY. Team Group’s revenue for June was TWD 2.796 billion, a 44.93% increase YoY, while Phison’s revenue was TWD 5.361 billion, a 55.93% increase YoY, both setting new monthly revenue records.

BIWIN and TWSC recently disclosed announcements expecting substantial year-on-year growth in net profit for the first half of 2024. BIWIN expects net profit after deducting non-recurring gains and losses to be CNY 275-325 million, a year-on-year increase of 191.12-207.69%. TWSC expects operating revenue to be CNY 2-2.3 billion, a year-on-year increase of 238.68-289.48%.

• Memory Companies Anticipate an Upward Trend in 2025

Both OEMs and module manufacturers hold positive attitudes towards the outlook for future memory market.

Micron, as one of the three major DRAM manufacturers, has seen its HBM business grow by leaps and bounds in recent years, greatly benefited from the AI wave. Therefore, Micron is steadfastly optimistic about the potentials of AI and HBM. Micron expects to generate several hundred million dollars in revenue from HBM in fiscal 2024, which is expected to reach several billion dollar in fiscal 2025. Additionally, Micron reiterated that HBM has been in tight supply, and its HBM memory chips have already sold out for 2024 to 2025.

Winbond Chairman Arthur Chiao noted that Winbond began to see a decline in memory sales since 2Q22 and signs of sales increase in 2Q24 after eight quarters. He expects sales volume to rise, followed by price increase. He positively predicts that the industry will enter an upward cycle over the next two years, and 2025 will experience remarkable growth. To sum up, he views the market outlook for next year as optimistic.

Adata Chairman Simon Chen emphasized that upstream manufacturers currently have a very positive and proactive attitude towards prices. The allocation of production capacity is prioritized for HBM with the highest gross margin, followed by general-purpose DDR5 and DDR4. Capital expenditures are also profit-oriented.

As a result, short-term spot price fluctuations do not affect the continuous and stable upward trend of DRAM and NAND Flash contract prices in the third quarter. Moreover, some DRAM spot prices have started to rebound recently. He is optimistic that after a short-term adjustment in the spot market, the company’s shipments will return to a growth trajectory as the coming of the traditional peak season in 2H24.

• NAND Flash Price Increase to Shrink in 3Q24

It’s worth noting that although memory manufacturers are generally optimistic about the future market, and the AI development has indeed boosted demand for products such as servers, HBM, and enterprise SSD, the downstream terminal application market has not yet fully recovered.

Meanwhile, the active moves in expanding production by original manufacturers may lead to changes in the future supply-demand balance. These factors suggest that the increase in some product contract prices in the future memory market may shrink.

TrendForce reports that a recovery in demand for general servers—coupled with an increased production share of HBM by DRAM suppliers—has led suppliers to maintain their stance on hiking prices. As a result, the ASP of DRAM in the third quarter is expected to continue rising, with an anticipated increase of 8–13%. The price of conventional DRAM is expected to rise by 5–10%, showing a slight contraction compared to the increase in the second quarter.

In terms of NAND Flash, TrendForce indicates that industry companies will continue to invest in server construction, and particularly, enterprise SSD will see order increase as a result of the expansion of AI adoption, while consumer electronics demand remains weak. In addition, original manufacturers tend to be active in expand production in 2H24. As a whole, the sufficiency ratio of NAND Flash supply will rise to 2.3% in the third quarter, and the blended NAND Flash price increase will converge to 5-10%.

Looking at the price trend of NAND Flash this year, the price of NAND Flash accelerated to rebound as original manufacturers remained conservative in production increases in 1H24, which enabled them to return to profitability.

However, as manufacturers significantly expand production in 2H24, and retail market demand has still not recovered yet, the decline in wafer spot prices has widened, with some wafer prices falling more than 20% below contract prices. This presents a challenge for the future increase in wafer contract prices.

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• [News] Memory Utilization Rate Near Full Capacity, Surpassing Mature Nodes Foundries
• [News] Memory Market Recovery is Near, as Winbond Expects a Good Year in 2025

(Photo credit: Micron)

According to TrendForce’s latest memory spot price trend report, prices of DDR4 chips have risen noticeably. Though inventory levels are still high for DDR4, buyers prefer DDR4 over DDR5 due to the price discount. On the other hand, the NAND Flash spot market remains lethargic in transactions. Details are as follows:

DRAM Spot Price:

Recent developments in the spot market show that prices of DDR4 chips have risen noticeably. Even though inventory levels are still high for DDR4 products at this moment, buyers prefer DDR4 over DDR5 due to the price discount. Moreover, DRAM suppliers intend to stabilize spot prices of DDR4 products and halt the ongoing decline. Hence, there has been an improvement with respect to the price trend. Nevertheless, further monitoring of inventory levels is necessary in order to determine whether this rally will continue for a longer while. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) has risen by 2.92% from US$1.918 last week to US$1.974 this week.

NAND Flash Spot Price:

The NAND Flash spot market remains lethargic in transactions, and various products are starting to experience a drop in prices after the mainstream 512Gb TLC wafer dipped below the US$3 threshold last week. With that said, buyers are still showing hesitation towards price inquiries despite slowed down decrement of spot prices, thus leaving no room for optimism on transactions. 512Gb TLC wafer spots remain unchanged in prices this week at US$3.291.

As the demand for AI chips surges, orders for thermal compression (TC) bonders, which play a critical role in HBM (high-bandwidth memory) manufacturing, are also heating up.

To further gain market momentum, South Korean chip packaging equipment manufacturer Hanmi Semiconductor plans to launch 2.5D big die TC bonder models in the second half of 2024, while increasing its annual sales target for this year to 650 billion won (USD 471 million), according to the latest report by the Korea Economic Daily.

Citing Kwak Dong-shin, vice chairman and CEO of Hanmi Semiconductor, the report notes that the company eyes strong revenue growth in the next two years, projecting 1.2 trillion won (USD 870 million) in sales for 2025, and 2 trillion won (USD 1.45 billion) for 2026.

TC bonders play a pivotal role in HBM production by employing thermal compression to bond and stack chips on processed wafers, thereby significantly influencing HBM yield. According to the report, Hanmi plans to introduce several upgraded models in the next two years, including 2.5D big die TC bonders in the second half of this year, mild hybrid bonders in the latter half of 2025, and hybrid bonders in 2026.

Memory giants have developed their own ecosystems to secure TC bonders’ supply. The report notes that Hanmi has been providing its TC bonders to SK hynix, while the latter is a major HBM supplier to Nvidia. In addition, the company also entered into a 22.6 billion won agreement with Micron in April.

Whether in the near future, Hanmi Semicodutor would be able to finalize similar contracts with Samsung, another memory heavyweight, remains to be seen. For now, Samsung sources its equipment from Japan’s Toray and Sinkawa, as well as its subsidiary SEMES.

Hanmi Semiconductor produces TC bonders at its six factories located in Incheon, where its headquarters are situated. The report indicates that it aims to increase the capacity of its newest, the sixth factory from 264 units of TC bonders annually this year to 420 units next year, which makes it the largest annual capacity for TC bonder producers worldwide.

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• [News] Rising HBM Production by Samsung and SK Hynix Energizes Korea’s TC Bonder Industry
• [News] ASMPT Reportedly Provided Demo TC Bonder to Micron for HBM Production

(Photo credit: Hanmi Semicondutor)

South Korean media reports that the main suppliers of artificial intelligence (AI) chip packaging are concentrated in TSMC and ASE Technology Holding Co., which have been actively expanding production to meet the growing market demand. Despite efforts to develop technology and invest, South Korean companies like Samsung Electronics have not been able to narrow the gap with TSMC and ASE.

According to the Chosun Ilbo, industry insiders indicated that TSMC is expanding its advanced packaging (CoWoS) capacity by selecting a site in the southern region, while ASE also announced the construction of a second packaging and testing factory in California, USA, and plans to build another in Mexico. The rapid growth of the AI chip market highlights the increasing importance of semiconductor packaging and testing. As the benefits of semiconductor process miniaturization diminish and production costs rise, advanced packaging that can connect multiple components has become an ideal alternative solution. Some organizations predict that the semiconductor packaging market is expected to grow by more than 10% annually and expand to USD 90 billion by 2030.

Taiwanese companies like TSMC and ASE benefit a lot, almost monopolizing the contract manufacturing of AI chips for companies like NVIDIA and AMD. In terms of chip manufacturing, TSMC aims to double its CoWoS capacity from the previous year to meet increasing orders. TSMC recently announced plans to build two new advanced packaging factories in the southwest. The construction of the first factory was paused due to the discovery of ancient artifacts, but TSMC quickly sought a new site and announced an expansion of CoWoS facilities investment by 2025.

ASE, serving customers including Qualcomm, Intel and AMD, is also striving to increase equipment investment to meet rising orders. ASE, with the highest market share in the semiconductor packaging and testing field, is increasing its capacity and considering building a factory in Japan to match the growing demand. ASE’s CEO Wu Tianyu stated that they are looking for a location in Japan with a solid semiconductor ecosystem for the new factory.

Samsung has also announced packaging investment plans. The company intends to raise the investment in the new plant in Taylor, Texas, USA from USD 17 billion to more than USD 40 billion for the construction of an advanced packaging research and development center and facilities, in which it will allocate over KRW 2 trillion annually to expand advanced packaging production lines.

South Korean semiconductor back-end packaging and testing (OSAT) companies such as Hana Micron and Nepes are also striving for AI chip packaging orders based on technical development. Hana Micron, the leading OSAT company in South Korea, has announced its commitment to developing 2.5D AI semiconductor packaging. Nepes is developing Package on Package (PoP) technology, which integrates different semiconductors into one chip, with a target for commercial mass production in the second half of 2025.

Despite the efforts of South Korean companies, it is difficult to narrow the gap with Taiwanese companies in the short term. Taiwanese companies have actively developed advanced semiconductor packaging and commercializing CoWoS at a earlier time, while South Korean packaging companies lag in accumulated technologies. South Korean industry insiders point out that TSMC and ASE have been collaborating for over 30 years. Therefore, as TSMC secured a large number of AI chip orders, it would prove a boon to Taiwan’s packaging ecosystem. In contrast, South Korea’s packaging industry, which has long focused on the memory production market, still has a long way to go to expand its market and even compete with Taiwanese companies.

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)