As reported by UDN News, Samsung Electronics is making a significant move by increasing the prices of NAND Flash memory by 20% every quarter until the second quarter of 2024. This price surge exceeds industry expectations.

Within the semiconductor industry, Samsung initially raised NAND wafer prices by 10% to 20% this quarter, Pulse reported. Now, the company has decided to continue this trend by progressively increasing prices by 20% during the first and second quarters of the next year. This strategic decision reflects Samsung’s determination to stabilize NAND wafer prices with the aim of reversing the market’s direction in the first half of the upcoming year.

Based on TrendForce’s research in October, with NAND wafer prices leading the increase since August and suppliers adopting a firmer stance in negotiations, Q4 enterprise SSD contract prices are projected to rise by approximately 5~10%. Meanwhile, reduced production of mainstream processes and fewer suppliers for high-end client SSDs have endowed suppliers with better bargaining power. Consequently, both high-end and low-end products are expected to increase concurrently, with 4Q23 PC client SSD contract prices projected to rise by 8~13%.

TrendForce also reports that Q4 contract prices for mobile DRAM are poised to see an increased quarterly rise of 13–18%. But that’s not all—NAND Flash is also joining the party, with contract prices of eMMC and UFS expected to climb by approximately 10–15% in the same quarter. This quarter is set to star mobile DRAM, traditionally the underperformer in profit margins compared to its DRAM counterparts, as it takes the lead in this round of price increases.

TrendForce foresees that memory prices are expected to continue trending upward in 1Q24. The rate of increase will depend on whether suppliers maintain a conservative production strategy and whether there is enough consumer demand to bolster the market.

Samsung’s Strategy on NAND Affect the Market and Company Performance

Following the latest financial report, NAND is a staple memory chip alongside DRAM, and together they account for around half of Samsung Electronics’ memory chip sales. In conjunction with the aggressive price hikes, Samsung is also curbing production to manage market supply effectively, promoting a positive market environment, and enhancing profitability.

At a recent financial conference on October 31st, Kim Jae-jun, Vice President of Samsung Eletronics, publicly stated, “There will be selective production adjustments to normalize inventories in a short time. A supply cut will be larger for NAND flash than for DRAM.”

Financial analysts estimate that as memory production cuts take effect and prices rise, Samsung’s operations will see a significant improvement starting from the fourth quarter of this year.

NAND Industry Foresee Bright Future amid Memory Price Surge

NAND-related businesses in Taiwan are also optimistic about the industry’s future. Khein Seng Pua, CEO of Phison Electronics Corp, indicated that the adjustment of OEM customer inventories, spanning the past six to nine months, is nearly complete. Consequently, Phison has secured more design-in projects, resulting in a gradual increase in wafer demand. Furthermore, Phison’s controller IC products have advanced into a new process generation, leading to a rise in value-added custom development projects.

Simon Chen, Chairman and CEO of ADATA, anticipates a prolonged period of rising memory prices, starting from the fourth quarter of this year and continuing into the first half of the next year. This is expected to create a two-year era of prosperity in the memory market, with supply shortages predicted in the coming years.

Industry experts highlight the reinvigoration of the NAND wafer market, with customers progressively returning. Samsung, being the global memory chip leader, is spearheading the price hikes, thereby contributing to a favorable pricing trend across the overall market.
(Image: Samsung)

Explore more:

• Suppliers Scale Back Production, Q4 NAND Flash Contract Prices Projected to Climb 8~13%, Says TrendForce
• Q4 DRAM Contract Prices Set to Rise, with Estimated Quarterly Increase of 3-8%, Says TrendForce

GIGABYTE held an online earning call on November 1st, during which General Manager Etay Lee expressed optimism about the company’s performance. The growth momentum in server and motherboard sectors remains robust, allowing GIGABYTE to potentially reach the significant milestone of NT$100 billion in annual revenue ahead of schedule. Additionally, the company is increasing its server revenue contribution this year, aiming for a remarkable double-digit growth.

As reported by Anue, Lee focused on the server sector, noting that the third quarter demonstrated impressive server revenue, and this momentum is expected to continue into the fourth quarter. The company is poised for high double-digit revenue growth in the server sector this year, with the ambition to challenge triple-digit growth. These developments have led to an upward revision of the annual revenue target.

Etay Lee emphasized the current high demand for AI servers, with a majority being shipped as units or racks. These include high quality networking, high efficiency storage, and High Performance Computing (HPC) integration. The increased components in AI server systems has led to a boost in revenue and gross profit; however, there is a slight decrease in the gross profit margin.

Regarding the expanded chip ban controls imposed by the United States, Lee clarified that GIGABYTE’s AI server products have a limited presence in the Chinese market, thereby minimizing the impact of these restrictions. Furthermore, in regions such as the Middle East and Vietnam where approvals are required, the company will also submit applications, and the overall impact is minimal.

In terms of graphics cards, GIGABYTE reported that inventory adjustments are completed, and channels have returned to normal levels. This, coupled with competitive pricing for the company’s main products, the 4060Ti and 4070, has generated strong demand starting from late in the third quarter. Notably, the European and American regions have witnessed a resurgence in growth, with demand surpassing that of the Asia-Pacific region.
(Image: GIGABYTE)

As reported by Jiwei, Beijing Xuanjie Technology Co., Ltd. has recently been established, and its legal representative is Xuezhong Zeng, who holds the position of Senior Vice President at Xiaomi Corporation. The company has registered capital amounting to 3 billion Yuan and is involved in activities related to IC design services and product sales, among other areas.

This marks the second “Xuanjie Technology” venture within the Xiaomi family. Back in December 2021, Shanghai Xuanjie Technology Co., Ltd. was established, also under the legal representation of Zeng. The company’s scope of operations encompasses technological services in the semiconductor field, integration of information systems, IC design and service related, and product sales. All of these are fully owned by X-Ring Limited.

Xiaomi, alongside OPPO and VIVO, among other Chinese smartphone brands, often find it challenging to independently develop advanced system on a chip (SoC) due to constraints in technical expertise and financial resources. Consequently, their primary focus on developing specialized chips like power management integrated circuits (PMICs) and Image Signal Processor (ISP), based on their collective experience in chip development.

Xiaomi stands out as the sole Chinese brand among these peers, having successfully launched its self-developed SoC in 2017, known as the “Surge S1,” which was integrated into the mid-range Xiaomi 5C. Nevertheless, the Xiaomi 5C fell short of expectations, mainly due to the absence of distinguishing features in the “Surge S1.” Many reviews highlighted subpar real-world performance of Xiaomi phones equipped with the S1 chip.

Subsequently, Xiaomi did not introduce a successor chip. In 2021, they introduced the ISP chip “Surge C1” and the charging chip “Surge P1.” In 2022, they rolled out the PMIC G1, emphasizing its significant potential in enhancing battery health, accurate battery life predictions, and overall smartphone battery performance.

Xiaomi’s President, Weibing Lu, has previously reaffirmed the company’s unwavering commitment to developing in-house chips. They fully acknowledge the long-term and intricate nature of chip development, respect the established development patterns in the industry, and remain prepared for a long-term strategy, all with the ultimate goal of enhancing the competitiveness and user experience of their end products.
(Image: Xiaomi)

DRAM Spot Market
Major module houses are still holding a fairly high level of inventory, so they are less adhered to the consensus that prices will go up. Currently, their main strategy in the spot market is to have their quotes closely aligned with the quotes in the contract market. Therefore, spot prices are not expected to change significantly before contract prices rise further in November. Even though the overall volume of spot trading remains low, the average prices of items are not fluctuating noticeably. For the mainstream chips (i.e., DDR4 1Gx8 2666MT/s), their average spot rose by 1.46% from US$1.577 last week to US$1.600 this week.

NAND Flash Spot Market

Spot transactions have been ramping up since September under the active inclination of price follow-ups among buyers, though spot prices have slightly mitigated in growth over the past two weeks after arriving at US$2, where some products are seeing a diminishing level of transactions due to the high markup. The continuity of price hikes will require further observations. 512Gb TLC wafer spots have risen by 12.72% this week, arriving at US$2.304.

Since October, China’s National Integrated Circuit Industry Investment Fund Phase II (hereafter referred to as “Big Fund Phase II”) has made two significant investments.

First, it invested in JCET Group’s subsidiary, JCET Group Automotive Electronics (Shanghai) Co., Ltd. (hereafter referred to as “JCET Automotive Electronics”). Later, it invested in ChangXin Xinqiao Storage Technology Co., Ltd. (hereafter referred to as “ChangXin Xinqiao”).

Data reveals that since its establishment, Big Fund II has invested in nearly 40 companies, with a total investment exceeding ¥55 billion. Despite the semiconductor industry’s low point this year, Big Fund Phase II has remained active, particularly emphasizing “strengthening the supply chain.” This includes increasing investments in critical areas like semiconductor equipment and materials.

1. Investing in ChangXin Xinqiao, Enhancing Storage Manufacturing

On October 26th, Big Fund II invested ¥14.5 billion to acquire a 33.14% stake in ChangXin Xinqiao.

According to industry sources, Changxin Xinqiao is one of the projects developed as part of the ChangXin Memory Technologies (CXMT), a collaboration between Hefei Municipal Government, CXMT, Overseas Chinese Town Holdings Company, and NAURA Technology Group Co. in 2019.

As per previous public announcements, the total investment in the CXMT Semiconductor Manufacturing Base exceeds 220 billion yuan. The project is situated in the Hefei Airport Economic Demonstration Zone and primarily focuses on the Changxin Memory project, involving the development of the entire upstream and downstream industrial chain.

Among these initiatives, the Changxin 12-inch storage memory wafer manufacturing base stands out with a total investment of 150 billion yuan, making it the largest single industrial project investment in Anhui Province.

Additionally, according to information on Changxin Memory’s official website, their core product is DDR4 memory chips, which belong to the fourth generation of double data rate synchronous dynamic random-access memory (SDRAM).

2. Increasing Investment in JCET Group’s Subsidiary: Automotive Electronics Focus

On October 27th, JCET Group’s subsidiary, JCET Group Automotive Electronics, received a total capital injection of 4.4 billion yuan from a combination of new and existing shareholders, further emphasizing its commitment to the development of in-vehicle technology. This infusion of capital will accelerate the construction of its first-phase project for manufacturing and testing automotive chips.

After this capital injection, the subsidiary’s registered capital increased from ¥400 million to ¥4.8 billion, remaining a subsidiary of JCET Group. JCET Group Management’s ownership will be diluted to 55%, while Big Fund Phase II will hold an 18% stake.

JCET Group stated that this capital injection is primarily intended for the construction and operation of the target company, aligning with the company’s strategic plans and business development requirements.It aims to better serve the continuously growing market and customer demands, especially in strengthening the company’s automotive electronics business.

Currently, the company’s financial health is robust, and it believes that this capital infusion will not significantly impact its liquidity.

3. Big Fund Phase II Focuses on “Strengthening and Supplementing the Supply Chain” and Plays a Significant Role in the Down Cycle

The semiconductor industry has experienced significant performance fluctuations due to the ongoing semiconductor down cycle. In response to these challenges, Big Fund Phase II has become more active.

The fund has appeared on the shareholder lists of multiple semiconductor companies striving for initial public offerings (IPOs), including Hua Hong Semiconductor Limited, RYCHIP Semiconductor Inc., Guanggang Gases & Energy Company Limited, and Sinophorus Electronic Materials Co..

Notably, Big Fund Phase II has shown continued interest in Hua Hong Semiconductor Limited.

Hua Hong Semiconductor 

Silan Microelectronics Co.

Silan Microelectronics Co. has also attracted significant attention from Big Fund Phase II. On August 28th, Silan Microelectronics announced its intention to jointly invest 1.2 billion RMB with affiliated company Big Fund Phase II and non-affiliated entity HaiChuang Development Fund to subscribe for newly increased registered capital of 1.19 billion RMB in the affiliated joint-stock company, Xiamen Silan Advanced Compound Semiconductor Co., Ltd.. Silan Microelectronics is set to acquire controlling interest in Xiamen Silan Advanced Compound Semiconductor, while Big Fund Phase II will hold a 14.11% stake.

Publicly available information indicates that Xiamen Silan Advanced Compound Semiconductor revolves around the manufacture of compound semiconductor chips. In July of the previous year, the company initiated the “SiC Power Device Production Line Construction Project.”

This project entails an investment plan of 1.5 billion RMB to construct a 6-inch SiC power device chip production line. Ultimately, it aims to achieve an annual production capacity of 144,000 pieces of 6-inch SiC power device chips, comprising 120,000 pieces/year of SiC-MOSFET chips and 24,000 pieces/year of SiC-SBD chips.

China Resources Microelectronics Limited

On August 15, it was announced that the company’s subsidiary, Runpeng Semiconductor, plans to increase capital and introduce external investors, including Big Fund Phase II. Following the completion of this transaction, Runpeng Semiconductor’s registered capital will increase from 2.4 billion RMB to 15 billion RMB.

The announcement indicates that the external investors that Runpeng Semiconductor intends to introduce include 12 institutions, including Big Fund Phase II. Big Fund Phase II is committed to subscribing to a registered capital of 3.75 billion RMB.

In addition, the upstream semiconductor materials sector has also attracted the attention of Big Fund Phase II. In late March of this year, Jingrui announced that its subsidiary, Hubei Jingrui, plans to introduce strategic investors through capital expansion. Big Fund Phase II, among others, is set to inject 160 million yuan in cash into Hubei Jingrui.

Summary

Overall, Big Fund Phase II’s investments span the entire integrated circuit industry chain. However, it’s worth noting that compared to Big Fund Phase I, Big Fund Phase II places more emphasis on strengthening and supplementing the supply chain.

It has increased investments in critical areas such as upstream semiconductor equipment, materials, and shows optimism towards emerging hot sectors like AI and automotive electronics.

(Photo credit: Pixabay)