On August 13th, as per a report from Wallstreetcn citing industry sources, it’s indicated that SK hynix has raised the price of its DDR5 DRAM by 15% to 20%. Per the sources, the price hike by hynix is primarily due to the production capacity being squeezed by HBM3/3e. Additionally, the increased orders for AI servers downstream have also strengthened SK hynix’s resolve to raise DDR5 prices.

According to industry sources cited by Economic Daily News, for Taiwanese manufacturers, Nanya Technology has recently started mass production of DDR5, just in time to benefit from this price surge. Module makers such as ADATA and Team Group are also likely to see gains from low-cost inventory.

Nanya Technology has begun shipping its 16Gb DDR5, developed using its 1B process. Nanya Technology is optimistic that the DRAM market is on a clear path to recovery. This may due to last year’s production cuts by the three major memory manufacturers—Samsung, SK hynix, and Micron—as well as the strong demand for HBM driven by generative AI. The resulting chain reaction is expected to positively impact various types of DRAM.

SK hynix previously announced that its entire HBM production capacity for 2024 has been fully booked, with almost all of its 2025 capacity also sold out. To meet customer demand, SK hynix plans to convert over 20% of its existing DRAM production lines to mass-produce HBM.

Samsung, on the other hand, is said to be actively trying to catch up with SK hynix, looking to allocate around 30% of its DRAM production capacity to HBM.

The significant adjustments by Samsung and SK hynix to their production lines have severely squeezed the capacity for DDR4 and DDR5 DRAM, potentially leading to a sharp reduction in supply and causing prices to rise. Reportedly, SK hynix’s price increase for DDR5 primarily targets contract prices.

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(Photo credit: Nanya Technology)

Global HBM leader, South Korea’s SK hynix, announced its financial report for the last quarter on July 25, exceeding market expectations. According to a report from Economic Daily News, the company also announced a full-scale effort to boost production of high-bandwidth memory (HBM) for AI, with this year’s capital expenditure expected to surpass initial projections. Additionally, more capacity will be allocated for HBM production.

Industry sources cited by the report also indicate that for Taiwanese manufacturers, the major global memory companies are expanding their HBM production capacity by converting existing DRAM capacity to HBM. This shift will suppress the supply of DDR4 and DDR5 DRAM, positively impacting market conditions.

Previously, as per sources cited by the Economic Daily News, it’s indicated that global memory leader Samsung plans to allocate about 30% of its existing DRAM capacity to HBM production. Now, with SK hynix reportedly making similar plans, this may benefit Taiwanese DRAM-related companies like Nanya Technology and ADATA in the future.

Reportedly, Nanya Technology is said to believe that the DRAM market has significantly improved due to the production cuts by the three major memory manufacturers—Samsung, SK hynix, and Micron—in the second half of last year, combined with the strong demand for HBM driven by generative AI. This chain reaction is spreading to various types of DRAM, and the company expects to see clear operational improvements soon.

SK hynix announced yesterday that its Q2 revenue increased by 125% year-on-year to KRW 16.4 trillion (USD 11.9 billion), setting a new record. Operating profit reached KRW 5.47 trillion, the highest since Q3 2018, significantly better than the KRW 2.9 trillion loss in the same period last year. The operating margin was 33%, exceeding expectations, mainly due to a more than 250% surge in HBM sales and an overall increase in DRAM and NAND chip prices.

SK hynix plans to begin mass production of the next-generation 12-layer HBM3e chips this quarter, enhancing its competitive edge over rivals Samsung and Micron in the design and supply of advanced memory for NVIDIA’s AI accelerators. HBM3e is expected to account for about half of all HBM chip sales this year. Additionally, capital expenditure for this year is likely to exceed initial expectations.

SK hynix predicts that the overall memory market will continue to grow in the second half of the year, with DRAM and NAND chip supply becoming tighter and demand for AI servers remaining strong.

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• [News] AI Boosts HBM Demand, SK Hynix’s Q2 Profits Reach Six-Year High
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(Photo credit: SK hynix)

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)

Kioxia, one of the world’s major NAND manufacturer, anticipates a strong market outlook, emphasizing a full recovery this season in key NAND applications such as PCs and smartphones.

According to a report from the Economic Daily News, coupled with an expected surge in demand for new laptops and smartphones driven by AI, NAND chip prices, which increased by 20% last season, are likely to continue rising this season, marking the fourth consecutive price hike. The industry’s future appears quite promising.

Benefiting from the recovering NAND market, Kioxia reported its first revenue growth in seven quarters and profitability for the first time in six quarters. During an investor conference, Kioxia noted that NAND chip prices in US dollar rose by approximately 20% last season, continuing an upward trend for three consecutive quarters, with the company’s quarterly shipment volume increasing by about 5% to 9%.

Kioxia emphasized that this season sees a recovery trend in key NAND end applications such as PCs and smartphones. Additionally, a new wave of laptop and smartphone upgrades driven by AI is expected, along with data centers requiring higher-capacity solid-state drives (SSDs) to support AI applications. All these factors positively impact the NAND industry.

Kioxia is reportedly optimistic that the proliferation of AI and the increase in memory capacity will continue to drive long-term growth in the NAND market. Due to disciplined production output by NAND chip manufacturers, the price increase trend is expected to continue this season, making the industry’s future prospects quite optimistic.

Taiwanese NAND manufacturer ADATA believes that although upstream NAND suppliers are gradually returning to profitability and steadily increasing capacity utilization rates, their approach to pricing and capacity planning remains rational. Coupled with a noticeable recovery in demand for enterprise and data center SSDs, ADATA is reportedly optimistic that NAND chip prices will continue to rise in a stable manner, per the same report from Economic Daily News.

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%; SK Group, with its market share increasing from 20.2% in the previous quarter to 21.6%, stood in the second place quarterly revenue.

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%.

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• [News] Memory Giants Reportedly Increasing Prices, But Is the Market Outlook Truly Positive?
• [News] NAND Flash Market Landscape to Change?

(Photo credit: Kioxia)

According to Economic Daily News’ report, after a prolonged period of economy downturn, the market has gradually become optimistic about memories. The effective production reduction by the top five memory manufacturers has led to an increase in memory prices.

This, in turn, has prompted downstream module manufacturers to actively increase their procurement efforts, resulting in shortages of certain products. Industry source indicates that manufacturers, including Samsung and Micron, are expressing intentions to raise prices.

Memory Manufacturers Keen to Raise Prices, Future Demand Monitoring Required

On December 7th, Western Digital had sent out price increase notifications to its customers. In the notification, Western Digital stated that the company would review hard drive product pricing weekly, anticipating a price increase in the first half of the coming year.

Regarding flash memory components, the company expects prices to cyclically increase over the next few quarters, with the cumulative increase likely surpassing 55% of current levels.

It’s worth noting that, at present, many in the industry are optimistic about the cessation and rebound of NAND chip prices. However, currently, suppliers are individually notifying customers of adjusted quotes. In this context, Western Digital has directly issued a price increase notice to customers, with an expected remarkable increase, marking the industry’s first comprehensive significant price hike.

Meanwhile, the latest financial reports of many companies in the memory industry chain show significant improvement compared to the previous period.

Samsung Electronics reported a net profit of KRW 5.5 trillion (approximately USD 4.17 billion) in Q3, transitioning from a loss to profitability. In early November, South Korean media Pulse, citing conversations with numerous insiders in the semiconductor industry, reported that as the Q4 inventory clearance phase nears its conclusion, Samsung is considering a sequential price increase of 20% for Q1 and Q2 of the coming year.

On December 11th, SSD controller chip manufacturer Phison announced its performance report for November, with consolidated revenue reaching NTD 5.407 billion (approximately USD 171.8 million), representing nearly a 5% monthly growth.

According to Phison, the total shipment volume of SSD controller chips continued to recover in November. Among them, the total shipment volume of PCIe SSD controller ICs is expected to grow by nearly 40% year-on-year, setting a new record for the same period in history. This further substantiates the news of a significant surge in the memory market.

In the latest financial report from memory module manufacturer ADATA, the company’s consolidated revenue for October was NTD 3.791 billion (approximately USD 120.4 million), reflecting a monthly increase of 13.43% and a year-on-year increase of 39.59%.

ADATA’s Chairman, Simon Chen, recently mentioned that they anticipate the completion of NAND Flash inventory clearance by the end of this year or the end of January next year. There is an expectation that both DRAM and NAND Flash may face supply shortages next year. 

In addition, DRAM manufacturer Nanya Technology observes a price increase in DDR5, while DDR4 prices have stabilized. There is an expectation of a slight improvement in DDR4 and DDR3 prices in the fourth quarter.

NAND Flash spot prices have surged since the end of September, driven by a collective production cut from suppliers. TrendForce analyst Avril Wu recently mentioned that Samsung’s production capacity has reduced by almost half from its peak, indicating that even cost-efficient manufacturers like Samsung can no longer endure losses. It is suggested that the average wafer price has likely passed its lowest point.

From the supply side, recent industry reports indicate that memory manufacturers are employing a “delaying tactic” in the supply of NAND Flash for the fourth quarter. Module manufacturers attempted to finalize orders for millions of chips in September, but memory manufacturers were reluctant to release the products, and even when they were willing, the quantities and prices were unsatisfactory. Meanwhile, Samsung is reportedly pausing quotations and shipments for NAND products.

Looking ahead to the fourth quarter, the estimated average selling price increase for all NAND Flash products is expected to reach 13%, with an overall quarter-over-quarter revenue growth rate of over 20% in the NAND Flash industry.

It is worth noting that according to TrendForce analyst Avril Wu, with demand not showing explosive growth, the market will be focused on three key considerations. First, after production cuts, the decline in memory manufacturers’ inventory levels has begun, but it remains to be seen whether inventory can continue to shift towards buyers.

Second, it is anticipated that memory manufacturers’ production capacity will slowly increase, and if the market warms up, an early resumption of capacity could lead to supply-demand imbalances again. Lastly, whether end-demand can meet expectations for a recovery, with a particular focus on the sustained orders related to AI, will be crucial.

Read more

• [News] NAND Flash Wafer Surges 25% in November – Continued Price Increases Depend on Manufacturers’ Expansion

(Photo credit: Samsung)