With the effective reduction of production by suppliers, the price of memory is rebounding, and the semiconductor memory market finally shows signs of recovery. From the perspective of market dynamics and demand changes, NAND Flash, as one of the two major memory products, is experiencing a new round of changes.

Suppliers are in Constant Motion: Increasing Prices and Adjusting Production Capacity Utilization

Since 3Q23, NAND Flash chip prices have been on the rise for several consecutive months. TrendForce believes that, under the precondition of a conservative market demand prospect for 2024, chip price trends will depend on suppliers’ production capacity utilization.

There have been frequent developments in the NAND flash memory industry chain, with some manufacturers indicating a willingness to raise prices or increase production capacity utilization.

Wallace C. Kou, General Manager of NAND Flash Supplier SIMO, stated that prices for the second quarter of NAND Flash have already been settled down, which will increase by 20%; some suppliers have started to make profits in the first quarter, and most suppliers will earn money after the second quarter.

Pua Khein Seng, CEO of PHISON, believes that further price increases for SSD solid-state drives may significantly reduce market demand. If prices are too high, demand may begin to waver again. He suggested that NAND manufacturers stop reducing production and start meeting demand, rather than allowing low supply and high demand to push up prices.

From the perspective of the industry chain, Samsung’s Xi’an fab has significantly increased its operating rate, and Kioxia is considering adjusting its production reduction plan.

As for Samsung, Samsung Electronics’ NAND Flash fab in Xi’an, China, has restored its operating rate to around 70%, according to a report from the global media “THE ELEC”. In 2H23, Samsung lowered the operating rate of the fab to 20-30%. This is the lowest point for the fab since the decline in memory prices and demand began in late 2022.

The Xi’an fab is Samsung Electronics’ only memory semiconductor production base located outside of Korea, with a monthly production capacity of 200,000 300mm wafers, accounting for 40% of Samsung’s overall NAND output.

Samsung Electronics plans to upgrade its Xi’an NAND Flash fab to the 236-layer NAND process and kick-off large-scale expansion. It is understood that the company will gradually introduce equipment capable of producing 236-layer NAND at the Xi’an fab in 2024.

As to Kioxia, the company recently stated that it will re-evaluate the production reduction plan for memory medium flash, used in electronic devices, implemented since 2022 and ramp up production. Kioxia expects that by March of this year, the utilization rate of its NAND fab will return to around 90%, relying on demand.

However, TrendForce pointed out that the previously predicted quarter-on-quarter increase in contract prices for NAND Flash in 1Q24 is about 20-25%. Although the overall demand outlook for the second quarter is still conservative, NAND Flash suppliers have adjusted their production capacity utilization since late in 4Q23 and early 1Q24.

In addition, NAND Flash buyers have already begun to gradually replenish their inventories in the first quarter. Therefore, the quarter-on-quarter increase in contract prices for NAND Flash in the second quarter will converge to 10-15%.

Market Landscape: Samsung Still Dominates, Two Major Manufacturers May Merge

Currently, the NAND Flash market is still dominated by the five major manufacturers, with Samsung and SK Hynix accounting for the lion’s share.

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%; next was SK Group, with its market share increasing from 20.2% in the previous quarter to 21.6%.

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%.

It is worth noting that Western Digital’s plan to merge with Kioxia, which has been in progress since 2021, has not yet been concluded. According to sources cited by a report from Japanese media 47news, the merger negotiations were opposed by a competitor, leading to their termination. Earlier reports from Japanese media Asahi News indicated that both parties might resume merger negotiations at the end of April.

Reportedly, Bain Capital is in talks with relevant companies to restart merger negotiations between Western Digital and Kioxia. If the merger is successful, the newly formed company will control one-third of the global NAND Flash market.

If the merger is successful, the new company founded by Western Digital and Kioxia will have a market share of over 30%, leading to a variation in the market landscape of the NAND Flash market.

Recently, Western Digital has taken action again. On March 5, the company announced that after splitting its NAND Flash business, it will retain its original name and focus on its core HDD business. It also stated that the split transaction is expected to be completed in 2H24.

In light of the announcement, Irving Tan, the current Executive Vice President of Global Operations at Western Digital, will serve as the CEO of the remaining independent HDD company, continuing to run under the Western Digital brand. The current CEO, David Goeckeler, will be transferred to the newly established company in the NAND Flash department and serve as the CEO of the new company.

The news of Western Digital’s divestiture of its NAND Flash business, which has long been plagued by oversupply, has sparked widespread discussion in the industry. However, the company believes that this move will accelerate innovation and bring new growth opportunities. At the same time, due to the independent capital structure, the operating efficiency of the two entities will be higher compared to a unified company.

Outlook: Q1 NAND Flash Industry Revenue May Increase by 20% QoQ

In terms of industry revenue, according to the latest research from TrendForce, NAND Flash industry revenue reached USD 11.49 billion in 4Q23, an increase of 24.5% from the previous quarter.

This was mainly benefited from the recovery of terminal demand due to year-end promotions, and the expansion of orders in the component market by reason of price hikes, as well as the vigorous shipment of bits compared to the same period last year. Meanwhile, companies continued to release views that demand in 2024 will perform better than in 2023, and strategic stocking has been initiated.

Looking ahead to 1Q24, TrendForce believes that with the significant improvement in supply chain inventory levels and prices still on the increase, customers continue to increase purchase orders to avoid the risk of supply shortages and rising costs.

Thereby, despite being the traditional off-season, TrendForce predicts that the industry revenue of NAND Flash in the first quarter will still increase by 20% QoQ due to the continuous expansion of order scale, which stimulates NAND Flash contract prices to increase by an average of 25%.

Read more

• [News] NAND Flash Manufacturers Kioxia and WD Reportedly Set to Resume Merger Talks in Late April
• [News] SK Hynix Rumored to Propose Collaboration with Kioxia for HBM Production in Japan

(Photo credit: Kioxia)

South Korean memory giant SK Hynix is reportedly exploring a collaboration with Japanese NAND flash memory manufacturer Kioxia to produce High Bandwidth Memory (HBM) for AI applications, as per MoneyDJ citing Jiji Press.

According to Jiji Press’ report on March 1st, it is estimated that production will take place at the Japanese plant jointly operated by Kioxia and Western Digital (WD). Kioxia, on the other hand, will evaluate the proposed collaboration based on semiconductor market conditions and its relationship with WD.

The report highlights that HBM, a type of DRAM primarily used in AI servers, is experiencing a surge in demand worldwide, led by NVIDIA. Moreover, according to a previous TrendForce press release, the three major original HBM manufacturers held market shares as follows in 2023: SK Hynix and Samsung were both around 46-49%, while Micron stood at roughly 4-6%.

For SK Hynix, leveraging Kioxia’s existing plants in Kitakami, Iwate Prefecture, and Yokkaichi, Mie Prefecture, Japan, to produce HBM would enable the rapid establishment of an expanded production system.

Meanwhile, the joint-operated Japanese plants of Kioxia and WD currently only produce NAND Flash. If they were to produce the most advanced DRAM in the future, it would also contribute to Japan’s semiconductor industry revitalization plan.

The report further addresses that SK Hynix has indirectly invested approximately 15% in Kioxia through Bain Capital, a U.S.-based investment firm. Bain Capital is reportedly negotiating with SK Hynix behind the scenes, seeking to revive the Kioxia/WD merger. However, as per sources cited in Jiji Press’ report, “this collaboration and the merger are two separate discussion matters.”

According to a previous report from Asahi News on February 23, Kioxia and WD are expected to restart merger negotiations at the end of April. Although the merger negotiations between the two parties hit a roadblock last autumn, both are facing pressure to expand their scale for survival. However, whether the two parties can ultimately reach a merger agreement remains uncertain.

As per TrendForce’s  data for 3Q23, Samsung maintained its position as the top global NAND flash memory manufacturer, commanding a significant market share of 31.4%. Following closely, SK Group secured the second position with a 20.2% market share. Western Digital occupied the third position with a market share of 16.9%, while Japan’s Kioxia held a 14.5% market share.

Asahi News further indicates that if Kioxia and WD, the 2 companies which all manufacture NAND Flash products are to merge, their scale will rival that of the global market leader, Samsung Electronics.

The Japanese government reportedly views the Kioxia/WD merger as a “symbol” of Japan-US semiconductor cooperation and has provided support. However, the merger negotiations hit an impasse last fall, reportedly due to opposition from SK Hynix, indirectly invested in Kioxia.

Read more

• [News] NAND Flash Manufacturers Kioxia and WD Reportedly Set to Resume Merger Talks in Late April
• [News] Kioxia and Western Digital Resume Merger Negotiations? Rumors of Bain Negotiating with SK Hynix Surface

(Photo credit: Kioxia)

A glimmer of hope for the once-failed engagement between NAND flash memory giants Kioxia and Western Digital (WD) may emerge again. According to a report from Japanese media Asahi News, the two parties may restart merger negotiations in late April.

 It’s reported on February 23rd that Kioxia and WD are expected to resume merger talks in late April. Although their merger negotiations hit a snag last fall, both companies are facing pressure to expand their scale for survival. However, whether they can ultimately reach a merger agreement remains uncertain.

According to the report, both Kioxia and WD manufacture NAND Flash products. If they merge, their scale will rival that of the global market leader, Samsung Electronics. The Japanese government reportedly views the Kioxia/WD merger as a “symbol” of Japan-US semiconductor cooperation and has provided support. However, the merger negotiations hit an impasse last fall, reportedly due to opposition from SK Hynix, indirectly invested in Kioxia.

As per TrendForce’s  data for 3Q23, Samsung maintained its position as the top global NAND flash memory manufacturer, commanding a significant market share of 31.4%. Following closely, SK Group secured the second position with a 20.2% market share. Western Digital occupied the third position with a market share of 16.9%, while Japan’s Kioxia held a 14.5% market share.

Asahi News’ report further indicates that WD declared in October of last year that “all discussions had ended.” To avoid insider trading, as per the report cited sources, WD is expected to wait for a certain period before the negotiation can be resumed. Therefore, once this waiting period concludes, merger talks are set to resume in late April.

Per a report from Jiji Press on February 17th, regarding the merger proposal involving Kioxia and WD, Kioxia has proposed a collaboration with SK Hynix, which opposes the merger. Kioxia has reportedly approached SK Hynix and plans to utilize the jointly operated Japanese plants of Kioxia and WD to manufacture semiconductors for SK Hynix.

The report notes that SK Hynix and Kioxia are competitors in the NAND Flash industry. However, since 2018, SK Hynix has indirectly invested approximately 15% in the predecessor of Kioxia, “Toshiba Memory,” through the American investment fund Bain Capital. SK Hynix has consistently sought to strengthen its relationship with Kioxia since then.

Kioxia’s proposed acceptance of SK Hynix’s request to “strengthen the relationship” is seen as a gesture to persuade SK Hynix to agree to the merger proposal. The goal, as per the report, is to restart the stalled merger negotiations between Kioxia and WD.

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• [News] Kioxia and Western Digital Resume Merger Negotiations? Rumors of Bain Negotiating with SK Hynix Surface

(Photo credit: Kioxia)

Another breakthrough has emerged in flash memory layer technology! A recent report cited by tom’s Hardware has suggested that at the upcoming International Solid-State Circuits Conference (ISSCC) in February of this year, Samsung Electronics will unveil the next-generation V9 QLC NAND solution, pushing flash memory layer technology to 280 layers.

The Battle of Layers is Far from Over

Reportedly, Samsung’s V9 QLC boasts a storage density of 28.5Gb per square millimeter, achieving a maximum transfer rate of 3.2 Gbps. This surpasses the current leading QLC products (2.4 Gbps) and is poised to meet the requirements of future PCIe 6.0 solutions.

Additionally, the report further highlights that Samsung’s V9 QLC is considered the highest-density flash memory solution to date.

Before Samsung, major storage giants such as Micron and SK Hynix had already surpassed the 200-layer milestone. Micron reached 232 layers with a storage density of 19.5Gb per square millimeter, while SK Hynix achieved 238 layers with a storage density of 14.4Gb per square millimeter.

Still, 280 layers are not the end of the storage giants’ layer count competition; there will be breakthroughs with even higher layer counts in the future.

In August 2023, SK Hynix unveiled the world’s highest-layer 321-layer NAND flash memory samples, claimed to have become the industry’s first company developing NAND flash memory with over 300 layers, with plans for mass production by 2025.

Reportedly, SK Hynix’s 321-layer 1Tb TLC NAND achieves a 59% efficiency improvement compared to the previous generation 238-layer 512Gb. This is due to the ability to stack more units of data storage to higher levels, achieving greater storage capacity on the same chip, thereby increasing the output of chips per wafer unit.

On the other hand, Micron plans to introduce higher-layer products beyond the 232-layer milestone. Samsung, with ambitious plans, aims to stack V-NAND to over 1000 layers by 2030.

Kioxia and Western Digital, after showcasing their 218-layer technology in 2023 following the 162-layer milestone, also intend to develop 3D NAND products with over 300 layers in the future.

Amid Memory Market Rebound, What’s the Trend in NAND Flash Prices?

Amid economic headwinds and subdued demand in the consumer electronics market, the memory industry experienced a prolonged period of adjustment. It wasn’t until the fourth quarter of 2023 that the memory market began to rebound, leading to improved performances for related storage giants.

According to research conducted by TrendForce, a global market research firm, NAND Flash contract prices declined for four consecutive quarters starting from the third quarter of 2022, until they began to rise in the third quarter of 2023.

With a cautious outlook for market demand in 2024, the trend in NAND Flash prices will depend on the capacity utilization rates of suppliers.

TrendForce has projected a hike of 18-23% for NAND Flash contract prices, with a more moderated QoQ price increase of 3-8% for 2Q24. As the third quarter enters the traditional peak season, the quarterly price increase could potentially expand synchronously to 8-13%.

In 4Q24, the general price rally is anticipated to continue if suppliers maintain an effective strategy for controlling output. For NAND Flash products, their contract prices are forecasted to increase by 0-5% QoQ for 4Q24.

(Photo credit: Samsung)

With the highly anticipated opening of TSMC’s Kumamoto fab on February 24th, 2024, multiple Japanese or global semiconductor manufacturers are set to begin large-scale production in newly established plants in Japan.

According to sources cited by TechNews, this development will stimulate the growth and advancement of Japan’s domestic semiconductor supply chain, enhancing Japan’s semiconductor manufacturing capabilities, transitioning from Renesas Electronics’ 40-nanometer process to JASM’s 12-nanometer process.

TSMC Kumamoto Fab Set to Open on February 24

In Kikuyo Town, Kumamoto Prefecture, Japan Advanced Semiconductor Manufacturing (JASM) company, jointly invested by TSMC, SONY, and Japan’s DENSO, is currently constructing a 12-inch fab.

▲ TSMC’s Layout of Global Production Capacity Edited by TrendForce, January, 2024

The facility will employ 12/16-nanometer and 22/28-nanometer process, focusing on the production of chips for automotive electronic applications. The fab is scheduled to open on February 24, with mass production expected to commence in the fourth quarter of 2024.

This shift is regarded as the first step in Japan’s semiconductor revitalization policy. In support of this initiative, the Japanese government has provided a financial subsidy of JPY 476 billion (approximately USD 3.2 billion) to the JASM fab, covering nearly one-third of the total expenditure, which amounts to USD 8.6 billion.

Kioxia and Western Digital Jointly Constructing 12-Inch Plant

NAND Flash memory giants Kioxia and Western Digital are jointly investing in the construction of a 12-inch plant in Yokkaichi, Mie Prefecture. The facility is set to begin preparing for mass production of 3D NAND Flash memory products by March 2024.

Industry sources note that the plant’s construction will cost JPY 280 billion (approximately USD 1.8 billion ), with the Japanese government providing up to 92.9 billion yen (approximately USD 600 million) in subsidies.

Another Kioxia and Western Digital joint venture plant located in Kitakami, Iwate Prefecture, is slated to open in the second half of 2024. Originally scheduled for completion in 2023, the project faced delays due to unfavorable market conditions.

Renesas Electronics Expands Power Semiconductor Capacity

Renesas Electronics is set to launch a new power semiconductor production line in 2024. However, since the company’s Kofu factory in Yamanashi Prefecture closed in October 2014, Renesas is committing JPY 90 billion to install a 12-inch wafer production line at its existing facility to meet the growing demand for power semiconductors, especially in electric vehicles (EVs).

The new production line will enable Renesas Electronics to enhance its capacity for power semiconductors such as IGBT and MOSFET, with plans to achieve mass production by 2024. Renesas Electronics’ expansion plan is expected to receive subsidy support from the Japanese Ministry of Economy, Trade, and Industry.

Toshiba and ROHM Semiconductor Collaborate to Integrate Production Lines for Power Semiconductors

Toshiba and ROHM Semiconductor have reached an agreement to collaborate. Under the agreement, Toshiba’s power semiconductor factory will begin integrating production with ROHM’s newly developed Silicon Carbide (SiC) power semiconductor plant in Kunitomi City, Miyazaki Prefecture. This collaboration is expected to receive government subsidies equivalent to one-third of the investment in the project.

Japan’s New Fab Projects Beyond 2025

Beyond 2025, Japan is set to witness the emergence of several new plants, including Micron Technology’s new 1-gamma (1γ) DRAM production facility in Hiroshima Prefecture.

JSMC, a foundry subsidiary of Powerchip Semiconductor Manufacturing Corporation (PSMC), is collaborating with Japan’s financial group SBI to complete construction by 2027 and begin chip production thereafter.

Additionally, Japanese semiconductor startup Rapidus plans to commence production of 2-nanometer chips in Hokkaido by 2027.

Furthermore, TSMC is currently evaluating plans for its second plant in Japan, expected to be located in Kikuyo Town, Kumamoto Prefecture. Reports suggest that TSMC is set to officially announce the location of the second wafer plant on February 6th.

Earlier discussions by TSMC Chairman Mark Liu regarding the second plant in Japan indicated ongoing evaluations and discussions with the Japanese government. Once the decision to build the second plant is finalized, it is anticipated to manufacture products utilizing 7-nanometer to 16-nanometer process technologies.

Japan’s resurgence in the semiconductor arena is palpable, with the Ministry of Economy, Trade, and Industry fostering multi-faceted collaborations with the private sector. With a favorable exchange rate policy aiding factory construction and investments, the future looks bright for exports.

However, the looming shortage of semiconductor talent in Japan is a concern. In response, there are generous subsidy programs for talent development. Japan is strategically positioning itself to reclaim its former glory in the world of semiconductors.

Read more

• [News] TSMC Reportedly Announcing Kumamoto Plant 2 in Japan, while U.S. Subsidies Expected by End of March
• [News] ROHM Eyes R&D Expansion in Power Semiconductor Production Venture with Toshiba

(Photo credit: TSMC)