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.

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• [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)

As memory prices and demand rise, memory manufacturers Nanya Technology and Winbond have resumed normal production, no longer reducing output as they did last year. TrendForce and industry sources cited in a report from Liberty Times Net also indicate that memory shipments will continue to recover in the third quarter.

Reportedly, memory manufacturers’ utilization rates have reached 90% to 100%, surpassing the 60% to 70% utilization rates of mature process foundries.

Last year, in response to market conditions, Winbond adjusted its inventory and reduced production at its Taichung plant by up to 30-40%. This year, as market demand has rebounded, production has resumed, with capacity now at full utilization, producing 58,000 wafers per month.

Moreover, Winbond’s Kaohsiung plant has introduced new capacity equipment, increasing monthly production from 10,000 to 14,000 wafers and upgrading processes from 25nm to 20nm.

Winbond’s General Manager, Pei-Ming Chen, stated that the company is currently operating at full capacity utilization, with shipments exceeding production. This indicates a continuous decrease in inventory levels and a rise in customer demand. He then expected the second half of the year to be better than the first, with DDR3 and DDR4 contract prices increasing each quarter, aiding the company’s core profitability.

Nanya Technology Increases Production, Aims to Turn Losses into Profits in Q3

Nanya Technology adjusted production levels dynamically last year, reducing output by up to 20%. However, production has gradually increased this year.

Nanya Technology anticipates improving DRAM market conditions and prices quarter by quarter, with the industry overall trending positively and a chance to return to profitability in the third quarter.

Nanya Technology reported consolidated revenue of NTD 3.363 billion (roughly USD 103 million) for June, up 0.35% month-on-month and 36.83% year-on-year, marking the second-highest level this year. Accumulated consolidated revenue for the first half of the year was NTD 19.424 billion (roughly USD 596 million), an increase of 44.4% year-on-year.

On the other hand, chairperson Doris Hsu of GlobalWafers, a major silicon wafer manufacturer, recently stated that currently, there is stronger demand for high-performance computing (HPC) and memory applications, while demand in automotive and industrial applications is weak. Demand for mobile applications is increasing, and customers are continuing to digest inventory, leading to a more conservative approach towards procurement.

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%. Among this, DDR3 & DDR4 prices expected to increase by 3–8% in Q3.

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• [News] Jensen Huang Confirms NVIDIA Approaches Certification of Samsung’s HBM Chips
• HBM3e Production Surge Expected to Make Up 35% of Advanced Process Wafer Input by End of 2024, Says TrendForce

(Photo credit: Nanya Technology)

According to a report from Commercial Times, Arthur Chiao, Chairman of Winbond, stated that this upward market cycle for the memory sector has arrived on time. Reportedly, customers are not worried about shortages, and all products made by Winbond will sell well all year round, boosting the momentum in 2025.

Looking at Winbond’s recent revenue trend, the company’s performance has risen in the second quarter, further hinting that the upward market cycle has arrived on time. Chao anticipates that this upward cycle could last for two years, making 2025 a good year throughout, with a possible downturn in 2026.

Considering Winbond’s NOR Flash, which has held the largest global market share since 2020, Chiao noted that this product is widely used in automotive, communication, telecommunications, wearable devices, and other technological applications. Overall, its sales recovery also represents a revival of the electronics market.

Regarding individual industries, as per the same report, Winbond expects the PC end market to grow by 5% to 10% in 2024. The mobile phone market, which has been in decline for three years, is also rebounding from its trough, with an estimated single-digit percentage growth. Consumer products, the first sector to undergo inventory adjustments, are also the fastest to recover. Networking and communications, driven by the growing application of Wi-Fi 7, is also optimistic in the second half of the year.

Winbond is also implementing the NCNT (Non-Taiwan, Non-China) strategy. Arthur Chiao emphasized that global trends are irreversible, and the company is starting to make early preparations in response to customer demands. Winbond’s General Manager, Pei-Ming Chen, added that the company will outsource packaging and testing to a partner factory in Malaysia and will first conduct product verification work. Although costs will rise, customers have indicated that it is acceptable.

Chiao further stated that in response to the AI trend, Winbond has adjusted its strategy and business organization. The company is transitioning from a component supplier to a service-oriented manufacturer and have established a dedicated business unit for customized memory solutions (CMS).

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• [News] DDR3 Price Rebound Expected in the Upcoming Quarters, Benefiting Taiwanese Manufacturers
• [News] From Technical Prowess to Integration Capability, TSMC and Intel Target Advanced Packaging to Seize Ecosystem Opportunities

(Photo credit: Winbond)

As the standard DRAM market experiences an unprecedented cycle of supply-demand imbalance, the shortage of DDR3 production capacity has become even more severe.

According to a report from the Economic Daily News, with leading manufacturers like Samsung exiting DDR3 production, while demand for DDR3 from AI and edge computing devices continuing to increase, the storage capacity per single device is rising sharply. This is expected to drive a rebound in DDR3 prices, potentially benefiting related Taiwanese manufacturers such as Winbond, Elite Semiconductor Microelectronics Technology (ESMT), and Etron.

In response to the shift of operational focus to high-bandwidth memory (HBM) and DDR5, the world’s top three memory manufacturers are gradually phasing out the DDR3 market.

Reportedly, Samsung has informed customers that it will cease DDR3 production by the end of the second quarter. SK Hynix had already converted its DDR3 production at its Wuxi plant in China to DDR4 by the end of last year. Meanwhile, Micron has significantly reduced its DDR3 supply to expand its DDR5 and HBM production capacity.

As per industry sources cited in the same report, it’s said that as the reduction in production by major DRAM manufacturers continues to take effect, it has driven standard DRAM prices up from the second half of 2023 to the present, with further increases expected.

Thus, prices for niche memory like DDR3 tend to lag behind standard DRAM by one to two quarters. For Taiwanese manufacturers such as Winbond, ESMT, and Etron, which focus on DDR3, the benefits of DDR3 price increases will gradually become apparent this quarter and next.

The industry sources cited by the same report also point out that DDR3 applications remain quite widespread. For example, WiFi 6 devices predominantly uses DDR3, and the next generation, WiFi 7 devices, will still primarily use DDR3/DDR4. Additionally, edge computing devices would continue to adopt DDR3. With supply significantly decreasing while demand remaining strong, DDR3 prices are expected to continue their upward trend.

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• [News] Controlled Market Demand Amid Earthquake Impact, Second Quarter DRAM Prices Expected to Rise by Over 20%
• [News] Increasing HBM Capacity to Sustain Market Share, SK Hynix Rumored to Upgrade Wuxi Plant

(Photo credit: Samsung)

The application period for the tax incentives under Taiwan’s Chip Act ended in late May. According to a report from the Economic Daily News, the Ministry of Economic Affairs announced on June 3rd that four semiconductor-related companies have applied, with the review process expected to be completed by mid to late July. Reportedly, it is said that major semiconductor companies, such as TSMC and MediaTek, have submitted their applications.

Under this act, eligible companies can benefit from certain tax deduction measures, including a 25% tax deduction for expenses on cutting-edge innovative R&D expenses and a 5% deduction on expenses of advanced process equipment, reportedly to be the most generous tax deduction measures ever in Taiwan.

The first round of applications from enterprises was accepted in February of this year, with the deadline on May 31st.

Regarding the eligibility criteria, according to the investment deduction measures announced by the Ministry of Economic Affairs, an eligibility company’s R&D expenses must reach NTD 6 billion, while its R&D intensity be at least 6%, and expenditures on equipment for advanced processes must reach NTD 10 billion.

The aforementioned criteria are not restricted by industry category. However, an effective tax rate of 12% for 2023 is required to qualify for the tax reductions under Article 10-2 of the Statute for Industrial Innovation.

Per the same report, it is understood that in 2023, there are nine listed companies meeting the two major thresholds, namely, reaching the NTD 6 billion threshold for R&D expenses and an R&D intensity of 6%, of which TSMC and MediaTek may potentially benefit from.

The Industrial Development Bureau stated that only four companies have applied for the tax benefits under the Taiwan Chip Act. They did not disclose the names of these companies, only mentioning that all applicants are semiconductor-related firms. It is widely anticipated that TSMC and MediaTek, the two most competitive companies in the country with the highest investment in R&D, are likely to benefit from the Taiwan Chip Act.

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• [News] Taiwan’s Chip Act Takes Effect in February, TSMC to Benefit from Historic Tax Incentives

(Photo credit: TSMC)