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.

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(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.

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(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.

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(Photo credit: Kioxia)

After ending production cuts amidst a recovery in the memory industry, Kioxia disclosed its plans on the 3D NAND roadmap last week. According to reports from PC Watch and Blocks & Files, Kioxia stated that achieving a 1,000-layer level by 2027 would be possible.

According to the reports, the number of 3D NAND layers has generally increased from 24 in 2014 to 238 in 2022, representing a tenfold rise over eight years. Kioxia stated that achieving a 1,000-layer level by 2027 would be possible at a rate of increase of 1.33 times per year.

The Japanese memory chipmaker seems to be more ambitious than Samsung regarding the battle of layers. In May, Samsung revealed its target to release advanced NAND chips with over 1000 layers by 2030. According to Wccftech, the South Korean memory giant plans to apply new ferroelectric materials on the manufacturing of NAND to achieve this goal.

According to the latest analysis from TrendForce, Kioxia has benefited from the recovery of the memory industry, recently receiving subsidies from the Japanese government and additional financing from a consortium of banks. Furthermore, the company plans to launch an IPO by the end of the year. These measures have provided Kioxia with ample financial resources to pursue technological advancements and cost optimization.

TrendForce further notes that Kioxia has ambitious plans to achieve 1000-layer technology by 2027, which is the highest number of layers announced by any manufacturer so far. However, to reach the milestone, it will be necessary to transition from TLC (3 bits per cell) to QLC (4 bits per cell), and possibly even to PLC (5 bits per cell). The technical challenges involved are significant, and whether Kioxia can achieve this market milestone by 2027 remains to be seen.

The Battle of Layers between Memory Giants

Kioxia and its partner Western Digital showcased their 218-layer technology in 2023 following the 162-layer milestone. Its current announcement to achieve the 1000-layer technology by 2027 would be a huge leap from that.

The battle of layers between memory giants has been intensifying as other memory heavyweights had already surpassed the 200-layer milestone. Earlier in April, Samsung confirmed that it has begun mass production for its one-terabit (Tb) triple-level cell (TLC) 9th-generation vertical NAND (V-NAND), with the number of layers reaching 290, according an earlier report by The Korea Economic Daily. For now, the company aims to stack V-NAND to over 1000 layers by 2030.

SK Hynix unveiled the world’s highest-layer 321-layer NAND flash memory samples in August 2023, claiming to have become the industry’s first company developing NAND flash memory with over 300 layers, with plans for mass production by 2025. Micron has also started to mass produce its 232-layer QLC NANDs in 2024.

Uncertainties behind Kioxia’s Optimism

However, to Kioxia, there are more challenges to overcome, as technological obstacles and Western Digital’s stance add uncertainties to its ambition. According to the report from Blocks & Files, increasing density in a 3D NAND die involves more than just adding layers, as each layer’s edge must be exposed for memory cell electrical connectivity. This results in a staircase-like profile, and as the number of layers grows, the die area needed for the staircase expands as well.

Therefore, to increase density, it is necessary to shrink the cell size both vertically and laterally, and to raise the bit level as well. All these scaling factors, including layer counts, vertical cell size reduction, lateral cell size reduction, and cell bit level increases, present their own technological challenges.

Moreover, according to Blocks & Files, WD has concerns regarding the manufacturing capital costs and the return on investment from selling chips and SSDs made with the fabricated NAND dies.

Citing Western Digital EVP Robert Soderbery in June, the report noted that in the 3D era, NAND manufacturing requires higher capital intensity but offers a lower cost reduction as bit density increases. The company even described the situation as the “end of the layers race,” indicating that there would be a slowdown in the rate of NAND layer count increases to optimize capital deployment.

How long would the battle of layers continue, and how far would it go? Technological breakthroughs as well as the willingness to endure higher capital intensity while the cost reduction being relatively limited may be key.

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(Photo credit: Kioxia)