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According to the reports from EETimes China and Blocks &Files, Western Digital (WD) is said to be considering spinning off its NAND and SSD business, which could be valued similarly to Solidigm.
Reportedly, WD plans to split into two separate business units: one focused on producing hard disk drives (HDDs) and the other on NAND flash memory and SSDs. This strategy is expected to enhance operational efficiency within each unit, allowing them to concentrate on their core strengths and ultimately achieve greater market value.
According to the report, WD CEO David Goeckeler will lead the NAND and SSD unit, while Executive Vice President of Global Operations Irving Tan will take on the role of CEO for the HDD business
Citing calculations by an analyst, the report notes that the standalone value of WD’s NAND and SSD business could range from USD 10 billion to 22 billion. This suggests that spinning off these businesses could lead to a higher market valuation for the company.
The report states that the market has not yet fully recognized the value of WD’s NAND business, and that the combined independent value of the two companies post-split will be at least USD 30 billion, with the potential to exceed USD 40 billion.
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(Photo credit: Western Digital)
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Facing increased market demand and the ongoing recovery of the memory industry, a report from Korean media outlet ETNews has reported that Samsung has confirmed its investment plan for the 6th-Generation DRAM production line at the Pyeongtaek P4 plant, with the goal of starting mass production in June 2025.
Reportedly, the 6th-generation DRAM, known as ‘1c ,’ is a next-generation DRAM utilizing 10nm-class technology. Despite it is said to be a product that has not yet been commercialized in the global semiconductor industry, both Samsung Electronics and SK hynix are already preparing for mass production.
Samsung’s Pyeongtaek P4 is a comprehensive semiconductor production center, divided into four phases.
Samsung Electronics reportedly planned to begin construction on the P4 facility in 2022 and commence operations this year. However, even after completing the P4 building and essential infrastructure like electricity and water, the company did not proceed with building a production line. Due the downturn in the semiconductor market, Samsung adopted a downsizing strategy by scaling back its existing facilities.
As the semiconductor market started to recover in the second half of last year, Samsung Electronics shifted towards expansion and investment by mid-year. The company began installing NAND flash equipment in the previously unused P4 facility and has now confirmed its investment in 1c DRAM production.
As per ETNews, Samsung plans to initiate 1c DRAM production by the end of this year. The company is said to be considering launching HBM4 using 1c DRAM in the second half of 2025.
Given that HBM consumes significantly more DRAM than traditional memory, it is speculated by the report that Samsung’s construction of the 1c DRAM production line at the Pyeongtaek P4 plant may also be in preparation for HBM4.
As per TrendForce’s latest report on the memory industry, it’s revealed that DRAM and NAND Flash revenues are expected to see significant increases of 75% and 77%, respectively, in 2024, driven by increased bit demand, an improved supply-demand structure, and the rise of high-value products like HBM.
Furthermore, TrendForce also reports that Samsung’s P4L facility will be the key site for expanding memory capacity starting in 2025, starting with NAND production. Equipment installation for DRAM is expected to begin in mid-2025, with mass production of 1c nanometer DRAM slated to commence in 2026.
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(Photo credit: Samsung)
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Japanese NAND flash giant Kioxia announced today (August 1st) that the building construction of Fab2 (K2) of its Kitakami Plant in Iwate Prefecture was completed in July. As demand is recovering, the company will gradually make capital investments while closely monitoring flash memory market trends. Kioxia plans to start operation at K2 in the fall of Calendar Year 2025, according to its press release.
A portion of investment for K2 will be subsidized by the Japanese government according to the plan approved in February 2024, according to Kioxia.
In addition, the company notes that some administration and engineering departments will move into a new administration building located adjacent to K2 beginning in November 2024 to oversee the operation of K2.
According to a report from Nikkei on July 31, Kioxia’s Kitakami Plant started production in 2020,with the construction of K2 began in 2022. Initially, K2 was scheduled to commence production in 2023.
However, due to a downturn in the memory market and weak demand for NAND Flash used in smartphones and PCs, Kioxia started to reduce production in October 2022, with the extent of production cuts exceeding 30%. As part of these production reduction measures, Kioxia postponed the production start of the K2 facility.
Nikkei’s report further indicates that with market conditions recovering, Kioxia ended its production cuts in June 2024, and the current production line utilization rate has returned to 100%.
To mass-produce advanced memory products, Kioxia, in collaboration with Western Digital (WD), plans to invest a total of 729 billion yen in the Yokkaichi and Kitakami plants, with the Japanese government providing up to 243 billion yen in subsidies.
The Kitakami plant will produce the most advanced “8th generation” memory, with a monthly production capacity of 25,000 wafers. These will be used in AI data centers, as well as in smartphones, PCs, and automotive applications.
On June 26, according to industry sources cited in a report from Reuters, Kioxia plans to submit an initial public offering (IPO) application to the Tokyo Stock Exchange in the near future, aiming to go public by the end of October. Sources indicate that Kioxia will submit its official IPO application by the end of August, with a target listing date at the end of October.
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(Photo credit: Kioxia)
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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.
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%.
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.
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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(Photo credit: Micron)