Pei-Ing Lee, the General Manager of Nanya Technology, a major DRAM manufacturer, mentioned on January 10th that this year has seen an upward trend in DRAM prices

According to Economic Daily News citnig from Nanya Technology’s earnings call for 23Q4,  this trend is attributed to the resurgence of the smartphone market, increased demand fueled by AI, and the three major memory manufacturers pivoting towards DDR5 production. This shift is advantageous for depleting DDR4 inventory and could potentially result in a supply shortage.

Having endured over a year of downturn in the memory market, Lee expressed an optimistic outlook by stating that “there is a possibility of future supply shortages,” revealing an overall positive trajectory for the DRAM market.

Lee acknowledged that the DRAM market faced challenges last year, resulting in stagnant bit sales for Nanya Technology. However, he anticipates a better scenario this year, noting the upward trend in DDR4 pricing. The timing for DDR3 price increases is expected to follow but at a slower pace. Lee further stated that DDR3 constituted about 40% of Nanya Technology’s revenue  in the past, but it is expected to decrease, with DDR4’s share rising.

Due to major international players focusing on High-Bandwidth Memory (HBM) and DDR5, he anticipates a potential supply shortage for DDR4 this year.

Lee pointed out that the growth in AI demand is positively impacting the DRAM market. The shift from high-end HBM and DDR4 to DDR5 is influencing demand, showing improvement quarter by quarter.

Regarding pricing trends, he confirmed a rebound in prices in the fourth quarter of 2023 and expressed optimism for a gradual upward trend in 2024. However, Lee cautioned that external variables such as geopolitical tensions, the war in Europe, and the U.S.-China trade dispute could still impact the market’s recovery momentum.

In terms of demand, Lee highlighted four key points. Firstly, server demand is driven by AI servers, with a focus on observing IT spending by U.S. cloud companies. Secondly, the introduction of new smartphones, leading to an increase in average DRAM capacity, especially in AI smartphones boosting the high-end smartphone market. Presently, improving smartphone sales in China are observed, and the recovery momentum of the Chinese economy is crucial.

In the PC application sector, Lee mentioned that inventory is gradually returning to normal levels, and AI PCs will simultaneously boost the high-end PC market. As for consumer electronic terminal products, demand for IP cameras, networking, industrial control, and automotive applications is relatively healthy, with consumer electronic products expected to show stable growth in 2024.

In terms of technological advancements, Nanya Technology aims to begin small-scale production of DDR5 products at the end of the third quarter of this year. Initially applied in servers and partly in PCs, the first product is expected to achieve a bandwidth of 5600MHz, while the second product is currently in the design phase, with an estimated bandwidth of 6400MHz.

Lee explained that their second DDR5 product will utilize third-generation processes, aiming to further improve cost structures, increase speed, achieve a target of 6400 MHz, and possess the capability for high density and 3D IC technology.

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(Photo credit: Nanya Technology)

SK Hynix CEO Kwak Noh-Jung expressed optimism at the Consumer Electronics Show (CES) in the United States, stating that artificial intelligence (AI) chips would propel SK Hynix’s market value to double within three years, reaching KRW 200 trillion (approximately USD 152 billion).

Kwak also revealed plans to adjust the DRAM production reduction policy in the first quarter, while anticipating changes in NAND Flash production strategy in the latter half of the year.

At the CES exhibition in Las Vegas, Kwak emphasized that generative AI is gradually becoming widespread, and memories are increasingly crucial. With the advancement of AI systems, customer demands for memory will become more diverse. Kwak highlighted the development of a platform to offer customized options for various customers.

“If we prepare the products we are currently producing well, pay attention to maximising investment efficiency and maintaining financial soundness, I think we can attempt to double the current market capitalisation of 100 trillion won to 200 trillion won within three years,” Kwak said.

Kwak further stated in the CES: “There are only three HBM providers in the market. What I can say for sure is that SK Hynix is a clear leader in the HBM space.”

For the current HBM market, as reported by TrendForce earlier, SK hynix holds the lead in HBM3 production, serving as the principal supplier for NVIDIA’s server GPUs.

Samsung, on the other hand, is focusing on satisfying orders from other CSPs. The gap in market share between Samsung and SK hynix is expected to narrow significantly in 2023 due to an increasing number of orders for Samsung from CSPs. Both firms are predicted to command similar shares in the HBM market sometime between 2023 to 2024—collectively occupying around 95%.

Meanwhile, when asked if SK Hynix would ease its current chip production reduction policy, Kwak responded that the company’s policies are flexible and will be adjusted based on different product categories.

He mentioned that SK Hynix might change its DRAM production reduction policy in the first quarter, while adjustments for NAND Flash are anticipated to take place in the latter half of the year.

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(Photo credit: SK Hynix)

The ongoing reduction in production by major manufacturers throughout this year has gradually restored balance to the market supply and demand. This is beneficial for chip manufacturers to regain control over prices. Signs of a bottoming out and rebound have emerged in the memory market in the third quarter of this year.

TrendForce data reveals that the overall price of DRAM has been declining since 4Q21 and only began to rebound in 4Q23, marking a total decline over 8 quarters. As for NAND Flash, the overall price started declining from 3Q22 and began to rebound from 3Q23, totaling a decline over 4 quarters.

However, despite the recovery in demand, achieving effective destocking and returning to a state of supply-demand equilibrium next year still heavily relies on suppliers exercising restraint in production capacity. If suppliers can control production capacity appropriately, there is a chance for the average memory prices to continue their rebound.

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(Photo credit: Samsung)

After more than two years of stagnation in the memory market, which was exacerbated by production cuts from major players like Samsung and Micron earlier this year, the issue of overstock has finally seen improvement.

As per Nikkei’s report, this has driven an increase in prices for DRAM, marking the first such occurrence in nearly two and a half years. Observers are optimistic that the memory market will hit bottom this year, with a recovery and growth expected in 2024.

According to TrendForce’s data, the contract price for the DDR4 8GB, considered a benchmark product for DRAM, reached USD 1.50 in October, a 15.4% increase from September and the first increase since July 2021. The contract price for the same product continued to rise in November by 10%, reaching USD 1.65.

In addition to the DDR4 8GB product, other specifications of DRAM contract prices generally experienced monthly increases of around 10% in October this year. Generally, memory contract prices are determined collaboratively by chip suppliers and corporate customers, and an increase in contract prices signifies an advantage for suppliers.

There are signs of a bottoming out and rebound in the DRAM market in the third quarter of this year. TrendForce indicated that the global DRAM market’s revenue increased by 18% compared to the previous quarter, reaching USD 13.48 billion.

This growth, reportedly, is primarily attributed to production cuts by major suppliers throughout the year, gradually restoring balance to the market supply and demand.

The report also reflects on the pandemic period, noting that the global surge in remote work initially led to a sharp increase in demand for memory. However, as the pandemic gradually subsided in 2021, market demand cooled.

Additionally, persistent challenges such as high inflation and interest rates impacting consumer spending weakened demand for PCs and various consumer electronic devices. This, in turn, led to global oversupply in memory, causing prices to decline consistently.

Major DRAM manufacturers, including Samsung, SK Hynix, and Micron, have been reducing production since the beginning of this year, and they have recently managed to reverse the downturn.

Samsung reported a 16% revenue growth in the third quarter, while SK Hynix achieved an impressive growth rate of 34.4%. Despite a decline in average selling prices, Micron’s third-quarter chip shipment growth contributed to an overall revenue growth of 4.2%.

Moreover, the global NAND Flash market saw a 2.9% sequential increase in revenue in the third quarter, and a growth rate of 20% is anticipated for the fourth quarter, according to TrendForce’s latest research.

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• [Insights] Due to Year-End Sluggish Demand, Spot Prices Hover for DRAM and NAND Flash
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(Photo credit: Samsung)

Amid a gradual recovery in the memory market, South Korean memory giants Samsung and SK Hynix are reportedly set to expand their equipment investments significantly next year.

Samsung aims for a 25% increase in investment, while SK Hynix plans to more than double its investment compared to this year, concurrently increasing production capacity, sparking industry attention.

According to South Korean media outlet ETNEWS, both Samsung and SK Hynix are planning to boost semiconductor equipment investments in 2024. Samsung’s investment is estimated at around KRW 27 trillion (approximately USD 20.78 billion), representing a 25% growth, while SK Hynix plans an investment of around KRW 5.3 trillion (approximately USD 4.07 billion), signaling a 100% increase from this year’s investment.

As ETNEWS’ report revealed, in addition to increasing equipment investment, Samsung and SK Hynix have also raised their production capacity targets for 2024. Samsung plans to expand both DRAM and NAND Flash production by approximately 24%, while SK Hynix aims to elevate DRAM output to levels seen by the end of 2022.

Looking at market share, according to TrendForce’s released data, in terms of third-quarter revenue figures, Samsung holds approximately 38.9% market share in DRAM, while SK Hynix stands at 34.3%.

In the NAND segment, Samsung holds approximately 31.4% market share, while SK Hynix stands at 20.2%.

Market concerns arise as the memory industry, which has recently seen relief from the long-standing oversupply pressure due to major manufacturers reducing production, faces the possibility of disruption once again. Amid the rebound in prices, the significant investments planned by the two major South Korean companies are causing apprehension that the memory industry may face new challenges.

Memory industry sources believe that despite Samsung and SK Hynix’s plans to increase semiconductor equipment investment and boost production capacity in 2024, the tool-in still take time. Improving production capacity utilization is not an instantaneous process.

Furthermore, there is a general consensus in the industry that several AI-related applications in the future will require large-capacity memory support. For instance, the expected 3% growth in global smartphone shipments (based on TrendForce’s report) next year is anticipated to contribute to the expansion of demand in the high-value memory market.

TrendForce also pointed out that recent news about memory manufacturers expanding investment and increasing production capacity is primarily driven by the growing demand in the HBM market, rather than capacity expansion for all products.

Read more

• NAND Flash Industry Revenue Grows 2.9% in 3Q23, Expected to Surge Over 20% in Q4, Says TrendForce
• Contract Prices Bottom Out in Q3, Reigniting Buyer Momentum and Boosting DRAM Revenue by Nearly 20%, Says TrendForce

(Photo credit: Samsung)