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.

Read more

• [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)

Japan’s leading NAND flash manufacturer, Kioxia, has reportedly increased its production line utilization rate to 100% as of June and is set to commence mass production of its most advanced NAND flash products in July.

According to a report from Nikkei on July 3rd, Kioxia will start mass-producing its latest NAND flash products at its Yokkaichi plant in July. This move is said to be meeting the rapidly growing data storage demands driven by the proliferation of generative AI. Reportedly, the new NAND flash products Kioxia will produce feature 218-layer 3D flash, offering approximately 50% more storage capacity and requiring about 30% less power for data writing compared to current products.

Per the same report, besides the increasing demand driven by AI, the improvement in the memory market also make Kioxia’s production line utilization rate to return to 100% in June. Previously, Kioxia had been implementing production cuts since October 2022 due to sluggish demand for smartphones, with the reduction scale exceeding 30% at its peak.

In an earlier report from The Register, Kioxia announced a partnership with Western Digital (WD) to invest JPY 729 billion in mass-producing advanced memory products. The new plant, located in the Kitakami plant area, is scheduled to start operations in 2025. The Japanese Ministry of Economy, Trade and Industry will provide a subsidy of up to JPY 243 billion (roughly USD 1.63 billion).

In April 2017, Toshiba spun off its semiconductor business focused on NAND Flash, creating “Toshiba Memory.” This entity was renamed “Kioxia” on October 1, 2019. Toshiba currently holds approximately 40% of Kioxia’s shares.

According to another Reuters’ report on June 26th citing sources,  they have indicated that Kioxia will soon submit an initial application for listing on the Tokyo Stock Exchange, aiming for an IPO by the end of October. Kioxia had been evaluating the possibility of going public to raise funds, and with the recovery of the semiconductor market and a rapid improvement in performance, it has determined that the timing is favorable for an IPO.

The sources cited by Reuters further indicate that Kioxia plans to submit its formal IPO application by the end of August, with the goal of going public by the end of October. To meet this timeline, preparations are being carried out at a faster pace than usual for an IPO. However, depending on progress, the IPO could be delayed until December. The sources also noted that Kioxia’s major shareholder, the American investment fund Bain Capital, plans to sell part of its stake during the IPO to recoup some of its investment.

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• [News] NAND Flash Giant Kioxia Reportedly Plans IPO by Late October amid Market Recovery
• [News] With Memory Market Recovering, Kioxia Has Reportedly Ceased Production Cuts and Secured Bank Lending

(Photo credit: Kioxia)

According to a Reuters report on June 26th citing sources, with semiconductor market conditions rebounding and financial performance rapidly improving, NAND flash leader Kioxia is reportedly gearing up to file a preliminary application soon and aims to debut on the Tokyo Stock Exchange (TSE) through an initial public offering (IPO) by late October.

As per the same report citing sources, Kioxia plans to formally submit its IPO application by the end of August, aiming for a listing by late October. In order to meet the deadline, preparations are proceeding at a faster pace than usual for an IPO, although the timing may be subject to progress and could potentially be delayed until December. The sources further indicated that Bain Capital, a major shareholder of Kioxia, plans to sell part of its stake through the IPO to raise funds.

Kioxia previously obtained approval for listing on the Tokyo Stock Exchange in 2020 but postponed its IPO plans due to the US-China trade tensions and adverse market conditions. The source cited in the report mentioned that the funds raised through this IPO might be lower than its initial valuation in 2020.

Toshiba spun off its semiconductor business, which focused on NAND flash, in April 2017. The company is previously named “Toshiba Memory,” which was later renamed to “Kioxia” on October 1, 2019. Toshiba currently holds approximately 40% of Kioxia’s shares.

Previously on May 15th, the improved market environment is also reflected in Kioxia’s financial report for January to March 2024, where the company achieved a net profit of JPY 10.3 billion, ending six consecutive quarters of losses.

This turnaround was driven by improved pricing due to production cuts across various NAND Flash manufacturers, which balanced supply and demand. The consolidated operating profit improved from a loss of JPY 171.4 billion in the same period last year to a profit of JPY 43.9 billion, marking the first quarterly profit in six quarters. Notably, the demand for smartphone and personal computer chips has bottomed out and is starting to recover, while orders related to data centers have increased.

Looking ahead to market trends and future prospects, Kioxia pointed out the normalization of customer inventory levels, which is expected to drive recovery in demand for PC and smartphone applications. They anticipate future growth driven by the introduction of On-Device AI, increasing memory capacities, and potential upgrades in PC operating systems stimulating replacement demand.

Read more

• [News] With Memory Market Recovering, Kioxia Has Reportedly Ceased Production Cuts and Secured Bank Lending
• [News] Kioxia Optimistic about NAND Market Sentiment; Price Hike Expected in Q2

(Photo credit: Kioxia)

According to TrendForce’s latest memory spot price trend report, neither the spot price of DRAM nor that of NAND flash shows much sign of a turnaround in the short term. It is also worth noting that the Chinese government has been cracking down on smuggling activities since the end of May, putting more pressure on the spot prices of reball DRAM chips. Details are as follows:

DRAM Spot Price:

The price trend of the spot market continues to deviate from that of the contract market, showing no signs of a turnaround. Apart from module houses carrying too much inventory, channel markets for consumer products also remain weak and have yet to see the effects of the impending peak season. Furthermore, the Chinese government has been cracking down on smuggling activities in the spot market since the end of May. As a result, spot prices of reball DRAM chips continue to drop. A rebound is not expected in the short term. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) has fallen by 2.54% from US$1.881 last week to US$1.835 this week.

NAND Flash Spot Price:

Enervated market transactions and sufficient inventory among channels have prevented a revitalization in demand from happening, despite spot suppliers’ willingness in compromising on prices. This has led to an ongoing divergence between spot and contract prices. Market participants are now on the fence regarding whether the market would exhibit demand for inventory replenishment in 3Q24. 512Gb TLC wafer spots have dropped by 0.57% this week, arriving at US$3.309.

According to the report from MoneyDJ, Western Digital (WD), a well-known memory device manufacturer, reported its latest financial report after the American stock market closed on April 25. Both revenue and profit for 1Q24 were better than market expectations, mainly driven by the robust AI demand and cloud service providers’ proactive acts in AI investment, which significantly boosted data storage demand.

According to WD’s financial result for fiscal third quarter 2024 (ending March 29, 2024), revenue increased by 23% YoY to USD 3.46 billion, surpassing the expected USD 3.36 billion from LSEG’s survey. Gross margin rebounded to 29%, up 18.8 percentage points from the same period last year at 10.2%; Net profit turned from a loss to a gain of $110 million, or USD 0.34 per share, far better than the net loss of USD 580 million, or net loss of USD 1.82 per share in the same period last year. Excluding one-time expenses, adjusted earnings per share were USD 0.63.

Photo credit: WD

The main “Cloud” segment saw robust revenue growth of 29% in the third quarter to USD 1.55 billion, mainly fueled by enterprises’ acceleration and expansion of data center construction, stimulating memory demand growth, with prices also rising accordingly.

Its competitor Seagate, a HDD manufacturer, also reported impressive financial results on April 23, with last quarter’s performance beyond expectations. The company expected continued growth of AI-driven memory demand and give a positive business outlook for this quarter.

Looking ahead to fiscal fourth quarter 2024 (ending June 28, 2024), WD estimates revenue will be USD 3.6-3.8 billion; adjusted earnings per share are estimated to be USD 0.90-1.20.

WD previously announced the separation of its two main product divisions, HDD and NAND Flash. The NAND Flash division will be spun off into a new company and go public, and the transaction is expected to be completed in the second half of 2024. Moving forward, WD will focus on its core HDD business to bring greater value to shareholders.

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(Photo credit: WD)