According to South Korean media Chosun Biz’s report, the prices of all memory products, encompassing servers, mobile devices, and PCs, are on the rise. This trend, combined with the thriving development of the AI market, is expected to result in even higher profitability for High-Bandwidth Memory (HBM) than initially anticipated.

Major memory manufacturers Samsung and SK Hynix are beginning to emerge from a business downturn, leading to upward revisions in their financial outlook for the fourth quarter of 2023.

The report notes that the adjustments in Q4 financial outlook by Samsung and SK Hynix indicate a rapid increase in demand for HBM due to the thriving AI market. Additionally, the recovery of the largest sales item, DRAM, is contributing to better operational performance for both companies in the fourth quarter.

Market experts reveal that Samsung’s projected operating profit for Q4 is expected to be KRW 3.487 trillion, showing slight growth compared to the estimate from a week ago. As for SK Hynix, the expected loss in Q4 is KRW 294.4 billion, reflecting a convergence from the market estimate of KRW 335.3 billion a week earlier, despite remaining in a deficit.

In addition, Micron, the American company considered one of the three major global DRAM manufacturers along with South Korean companies Samsung and SK Hynix, has also revised its financial forecast for the first quarter of the 2024 fiscal year.

The initial estimate in November of USD 4.4 billion has been adjusted to USD 4.7 billion , while the expected Earnings per Share has been raised from USD -1.07 to USD -1.

Regarding trends in the memory industry, TrendForce indicated in a recent report that a key turning point in the third quarter for the NAND Flash market was Samsung’s decision to actively reduce production.

Previously, buyers maintained a low inventory and slow procurement strategy due to concerns about low visibility of end demand and worries about a lackluster market peak season. With the leading supply-side companies significantly reducing production, buyers, anticipating a significant reduction in supply, have shifted to a more positive procurement attitude. By the end of the third quarter, contract pricing for NAND Flash had shifted toward stabilization and even price increases.

TrendForce predicts that NAND Flash products will experience both increased volume and prices in the fourth quarter. The average selling price for all products is estimated to increase by 13%, and the overall revenue growth for the NAND Flash industry in the quarter is expected to exceed 20%.

Contrarily, in the case of DRAM, prices have been on a downward trend since 2023, but they started to rise from October. TrendForce believes that the three major global DRAM manufacturers have begun intensive production cuts, and as market demand begins to recover, the pricing power of memory manufacturers is gradually increasing.

In terms of DRAM supply in the fourth quarter, memory manufacturers have a clear upward pricing attitude, as TrendForce projects a noticeable increase of approximately 13-18% in contract prices during this period. However, the recovery in demand is not as strong as in previous peak seasons.

Overall, while there is demand for stocking up, in the current scenario, the server sector remains passive in terms of procurement due to high inventory levels. The shipment growth in the DRAM industry for the fourth quarter is expected to be limited.

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(Photo credit: Samsung)

China’s top panel makers, including BOE, TCL CSOT, HKC, and CEC-CHOT, are cutting production to support TV panel prices. Speculations indicate a capacity utilization drop below 60% in the first quarter, benefiting Taiwanese panel companies like Innolux and AUO. Despite these efforts, industry sources caution of a panel industry slowdown due to reduced demand, possibly resulting in lower TV panel prices, reported by TechNews.

The memory industry saw a big downturn due to major players like Samsung, SK Hynix, and Micron drastically reducing production. This resulted in a surge in memory prices and a gradual recovery for the entire memory industry. Panel makers may adopt a similar strategy to boost the overall panel industry as well.

Chinese panel companies currently command a global market share of over 70% in TFT-LCD, with the world’s top 3 LCD panel makers from China: BOE, TCL CSOT, and HKC. As China holds the largest share of panel production capacity, a reduction in production by major players could have a more substantial impact on the panel industry compared to the effects on the memory industry caused by Samsung, Micron, and others.

According to TrendForce’s report in November, BOE began adjusting its production levels in the Q3 and will continue to do so in Q4, with an estimated decrease of 7 percentage points in utilization rates. CSOT, on the other hand, maintained high utilization rates in Q3, supported by major customer stockpiling and the ramp-up of the T9 new production line. However, due to reduced procurement of TV panels by both in-house group brands and international frontline brands, CSOT’s utilization rate is expected to decrease by about 17 percentage points to 76% in Q4.

HKC, which still has two production lines not running at full capacity, anticipates a 14 percentage point decrease in its utilization rates for Q4. This is primarily due to the need to reduce production of one of its main products, the 32-inch TV panel, to alleviate inventory pressures and avoid significant price drops.

In response to this, both Innolux and AUO express their intention to dynamically adjust production capacity utilization in line with market conditions. This strategic flexibility is aimed at fostering a more robust and balanced industry order.

Overall, most panel makers are adopting a more conservative approach to production for 1Q24. Furthermore, several panel makers have indicated a two-week Lunar New Year shutdown for 2024. As a result, TrendForce anticipates that overall Gen5+ LCD panel utilization rates may be revised down to 70% or lower in 1Q24 to maintain the market supply-demand balance.

(Image: BOE)

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India could see at least three more semiconductor fabrication units coming up in the next few months with cumulative investments to the tune of USD 8-12 billion, Union Minister for Electronics and Information Technology Ashwini Vaishnaw said on Tuesday.

India is working hard to get big semiconductor companies to build chip plants in the country with its $10 billion semiconductor program. Global semiconductor giants are considering making factories in India driven by the need to diversify supply chains beyond China and the big demand for tech talents in India.

According to Deccan Herald’s report. At the unveiling of AMD’s global design center in Bengaluru on November 28th, Ashwini Vaishnaw, Union Cabinet Minister for Railways, Telecommunications, Electronics and Information Technology of India, briefed journalists on ongoing negotiations with several local governments to determine precise locations in the following months.

AMD’s global design center plans to host around 3,000 AMD engineers in the coming years, focused on the design and development of semiconductor technology including 3D stacking, artificial intelligence, machine learning, and more. Vaishnaw pointed out that AMD setting up its biggest design center is strong evidence of how much global companies trust India. Besides, Vaishnaw highlighted the achievement of Micron’s semiconductor plant project, which was revealed in June and started construction in September. He said the success of Micron’s initial facility in India has boosted confidence globally.

Apart from global giants’ investment in India, the minister also told about the Semiconductor Lab (SCL) progress in Mohali, mentioned significant headway in the Expression of Interest (EoI) process. He anticipates finalizing matters within the next 5-6 months. The lab is planned to serve as both a research and semi-commercial facility.

The Indian government asserts that a comprehensive microprocessor chip manufacturing initiative is on the horizon in the country. Anil Agarwal, Chairman of Vedanta, anticipates the launch of “Vedanta chips made in India” by 2025, reported by icbank on weixin.

The government envisions establishing a “semiconductor city” in Dholera, Gujarat, covering an area equivalent to Singapore, with Prime Minister Modi expressing confidence in attracting both domestic and international giants to set up manufacturing plants despite the remote location.

The tech hub in Bangalore has played a pivotal role in India’s ascent as a global participant in the semiconductor network, primarily through chip design. Over the past two years, substantial government subsidies have transformed India into a hub for electronic product manufacturing.

India’s Challenges abound in the Actual Chips Manufacture

Despite initiatives like the “production-linked incentive measures” encouraging mobile assembly in India since 2020, chip manufacturing remains a formidable task.

Presently, nearly all cutting-edge chips are produced in Taiwan, with China’s chip investments surpassing those of India. Vedanta Group’s Agarwal plans to kickstart chip manufacturing within two and a half years, extending invitations to global chip manufacturing experts.

While today’s cutting-edge chips are predominantly manufactured in Taiwan, TSMC has even established a fab in Arizona with the assistance of the U.S. “Chip Act.”

India lacks a historical presence in chip manufacturing and faces a shortage of highly skilled engineers and equipment. Nevertheless, the government aims to achieve what companies like TSMC took decades to accomplish through substantial spending and capital investment promotion. However, China’s significant investments in domestic chip manufacturers, following the U.S. ban tightening China’s semiconductor development last October, far exceed India’s investments in local companies.

With the goal of establishing India’s inaugural semiconductor foundry, Mr. Agarwal of Vedanta Group aims to commence chip manufacturing within two and a half years, extending invitations to international talents like David Reed and Texas Instruments.

Agarwal aspires to attract around 300 foreign experts from East Asia and Europe to Gujarat. The manufacturing of microchips also necessitates a significant amount of customized infrastructure, with Vrishno, the responsible official, indicating that India’s largest chemical plant near Dholera can produce the specialized gases and liquids required for any chip factory’s operation.
(Image: AMD India)

This year, increasing demand for ChatGPT, along with ongoing innovations in PC and server technologies, has driven a growing market preference for high-value DRAM chips such as HBM and DDR5. Memory giants are collectively and actively positioning themselves in the production of these products.

DDR5: Micron Unveils New Products, Samsung Plans Line Expansion

The current DDR5 process has advanced to 1β DRAM. In October, Micron announced the release of DDR5 memory based on 1β technology, boasting speeds of up to 7200 MT/s. This product is now shipping to all customers in the data centers and PC markets.

Recently, Micron introduced the 128GB DDR5 RDIMM memory, utilizing 32Gb chips. With speeds of up to 8000 MT/s, it is suitable for servers and workstations. It also employs Micron’s 1β technology, and achieves a 24% improvement in energy efficiency and a 16% reduction in latency. Micron plans to launch models with speeds of 4800 MT/s, 5600 MT/s, and 6400 MT/s in 2024, with a future model reaching 8000 MT/s.

On the other hand, memory giant Samsung is committed to increasing DDR5 production capacity. Reports suggest that Samsung is planning to expand the production of high-value DRAM, investing in the infrastructure for advanced DRAM and increasing R&D spending to solidify its long-term market dominance.

Samsung, report as per KED Global News, is internally considering expanding DDR5 production lines. Given the high value of DDR5 and its adoption in the PC and server markets, this year is essentially regarded as the “year of widespread DDR5 adoption.”

HBM: Expansion Trend Begins, Significant Revenue Growth Expected

Amid the AI boom, HBM continues to gain popularity with demand supply outpacing. To meet this demand, storage giants are actively expanding production.

Recent reports indicate that companies like Samsung are planning to increase HBM production by 2.5 times. Additionally, in early November, it was reported that Samsung, to expand HBM capacity, acquired certain buildings and equipment within the Samsung Display Cheonan Factory. Samsung plans to establish a new packaging line at Cheonan for large-scale HBM production, having spent 10.5 billion Korean won on the acquisition and planning additional investments ranging from 700 billion to 1 trillion Korean won.

Micron, on the other hand, announced the official activation of its Taiwan-based Taichung Fab on November 6th. This facility will integrate advanced probe and 3D- packaging test, producing HBM3E and other products to meet the growing demand in various applications such as AI, data centers, edge computing, and the cloud.

TrendForce indicates that HBM, a memory embedded in high-end AI chips, is primarily supplied by three major vendors: Samsung, SK Hynix, and Micron. With the AI trend driving demand for AI chips, demand for HBM is also expected to increase in 2023 and 2024, prompting manufacturers to ramp up HBM production.

Looking ahead to 2024, the supply of HBM is expected to improve significantly. In terms of specifications, as AI chips demand higher performance, the mainstream for HBM in 2024 is expected to shift to HBM3 and HBM3e. Overall, with increased demand and higher average selling prices for HBM3 and HBM3e compared to the previous generation, HBM revenue is expected to see significant growth in 2024.
(Image: Samsung)

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As the memory market faces oversupply and falling prices due to declining demand in 2023, there’s a glimmer of hope when looking into their Q4 guidance. Memory prices are gradually rising, indicating a potential escape from the market’s low point. The most recent financial reports from the world’s top five companies substantiate this positive outlook.

1. Mixed Results in the Financial Reports of Top 5 Giants

From the recent financial reports of Samsung, SK Hynix, Micron, Kioxia, and Western Digital reveal a slowdown in the rate of revenue loss despite some reporting losses. Some companies express optimism, noting a gradual recovery in certain downstream demand.

Samsung: Anticipating Q4 Demand Recovery

Samsung Electronics’ Q3 financial report shows a revenue of 6.74 trillion Korean won, a YoY decrease, but with a net profit exceeding expectations at 5.5 trillion won.

During their earnings call on October 31, Samsung highlighted the uncertainty in the recovery of the storage chip market. However, they remain optimistic about increased demand in Q4, driven by year-end promotions, new product releases from major clients, and growing demand for generative AI.

SK Hynix: Positive Signs in Market Conditions

SK Hynix’s report for the Q3 2023 fiscal year indicates improving market conditions, particularly due to increased demand for high-performance memory, especially in AI-related products. DRAM and NAND flash memory sales have grown, with a significant 20%  QoQ increase in DRAM shipments. Rise of average prices also impacts the results. In the second half of the year, customers with reduced inventory are progressively increasing their procurement demands, leading to stable developments in product prices.

Micron’s performance for the Q4 2023 fiscal year shows revenue of $4.01 billion, a 40% year-on-year decrease but better than market expectations. The DRAM business accounts for 69% of revenue, with $2.8 billion in revenue, an increase in bit shipments but a decrease in average selling price. NAND Flash revenue is $1.2 billion, with an increase in bit shipments but a decrease in ASP.

Micron expects Q1 revenue for the 2024 fiscal year to reach $4.2~4.6 billion, anticipating a recovery in the storage market in 2024 and further improvement in 2025.

Kioxia: Rebound in NAND Prices

Kioxia released its financial report for July to September 2023, with revenue of 241.4 billion yen, a 3.9% decrease QoQ and a 38.3% YoY decrease. Due to a decline in demand for smartphone and PC memory chips, the operating loss was 100.8 billion yen in the Q2. However, benefiting from the improvement in storage supply-demand balance, optimized storage portfolio, and the performance of the yen exchange rate, the operating loss has improved.

Although NAND shipments have decreased, the situation has improved due to the rebound in NAND prices. NAND bit shipments decreased by approximately 13%, and NAND ASP increased by about 8%. Looking ahead to 2024, Kioxia expects NAND prices to continue to rise with the original equipment company’s production reduction strategy and customer inventory normalization. Confidence in the NAND market’s recovery is expected, especially in data centers and enterprise SSD demand, after the first half of 2024.

Western Digital: Cloud Market Continues to Grow

Western Digital announced Q1 revenue for the 2024 fiscal year, totaling $2.75 billion, a 3% increase QoQ and a 26% YoY decrease. In the end market, the decline in flash memory prices was offset by the growth in flash memory shipments, driving some business growth on a QoQ basis.

CEO David Goeckeler stated that Q1 performance exceeded expectations, with profit margins for flash memory and HDD business continuously improving. He pointed out that the consumer and end-user markets performed well, and the cloud market is expected to continue growing. With market improvement, an improved cost structure enables the company to increase profitability.

2. Changing Supply and Demand Dynamics: Some Applications Boosting

Storage companies are adapting to the market by reducing capital expenditures and adjusting inventory, leading to a more normalized market inventory. Simultaneously, increased demand in AI servers, high-performance computing, and automotive intelligence instills confidence in the market.

In the second half of the year, there are clear signs of improvement in the supply and demand dynamics of storage chips. Demand for smartphones, laptops, and new product releases is driving positive trends. Some companies are witnessing strengthened customer demand, even accepting price increases.

In the server sector, AI servers are boosting demand for high-bandwidth memory (HBM), and DDR5 adoption is accelerating. In the automotive storage sector, electric vehicles, intelligence, and networking are propelling in-car storage demand, indicating promising developments in the automotive storage market. Other applications such as big data, cloud computing, and wearable devices related to high-speed storage, reliability, and data security also present growth potential, benefiting storage companies.

3. Comprehensive Rise in Storage Chips: Is a Turning Point Near?

According to TrendForce, the global NAND Flash market has experienced a comprehensive price increase in the Q4, driven by suppliers’ active production reduction strategies in 2023. Data from TrendForce indicates a general rise in Q4 NAND Flash contract prices, with an increase of about 8-13%.

TrendForce estimates a negative annual growth rate of -2.8% for supply in 2023, the first in several years. This has pushed the overall sufficiency ratio to -3.7%, forming the basis for stabilizing NAND Flash prices in the second half. However, the sustainability of the current upward trend remains unclear due to the lack of substantial terminal demand.

If demand recovers as expected in the second half of 2024, especially with the momentum of AI-related orders for server SSDs and a cautious approach by suppliers in resuming capacity utilization, the overall sufficiency ratio is expected to be controlled at -9.4%, accelerating the balance between supply and demand, and NAND Flash prices may show an upward trend throughout the year.

For DRAM, TrendForce predicts a seasonal increase of about 3-8% in DRAM contract prices in the Q4. The continuation of this upward trend depends on whether suppliers maintain their production reduction strategy and the actual recovery of demand, particularly in the general server.

During the MTS 2024 Storage Industry Trends Seminar, TrendForce highlighted three concerns for the memory market in 2024:

(1) Despite the reduction in inventory levels, it is essential to observe whether this reduction can be sustained and effectively transferred to buyers.

(2) Anticipating a rise in production capacity, an early recovery in operational rates due to market improvements may lead to another imbalance in supply and demand.

(3) Whether the demand from various end-users will align with the expected recovery or not, particularly the sustainability of orders related to AI.
(Image: Samsung)