After a rebound from the decline in NAND prices, the current quotations still show a gap from reaching the breakeven point for suppliers such as Samsung, Kioxia, SK Hynix, and Micron.

Major domestic players in the NAND Flash industry indicate that NAND Flash suppliers, driven by the goal of profitability, will continue to aggressively raise prices. It is anticipated that prices will need to increase by over 40% once again for major manufacturers to break even. To achieve profitability, future price hikes are expected to be at least 50% or even higher, according to Economic Daily News.

Looking at the global NAND Flash market share in 3Q23, according to a report from TrendForce, Samsung holds the leading position with a market share of 31.4%. The second position is held by the SK group, with a market share of 20.2%, followed by the U.S.-based Western Digital at third place with a market share of 16.9%. The Japanese company, Kioxia ranks fourth with a market share of approximately 14.5%.

The industry indicates that due to the lower profitability of NAND Flash compared to DRAM, international giants are actively reducing NAND Flash production.

Taking Samsung as an example, since September of this year, the reduction in NAND chip production has expanded to 50% of total capacity, focusing on products with stacked layers up to 128 layers. The goal is to accelerate destocking and stabilize prices, with plans to gradually increase prices in 2024.

TrendForce has indicated that following Samsung’s expansion of the production reduction to 50%, other suppliers are also maintaining a restrained wafer allocation strategy. After more than half a year of production reduction in some processes and capacities, there is a structural supply shortage, providing an advantage for chip manufacturers in price control. Observing the market in the fourth quarter, there are almost no low-priced sources available for purchase. However, buyers still tend to maintain high inventory levels and continue purchasing.

Industry sources revealed that the NAND chip prices had plummeted too deeply before. Although the quarterly increase in contract prices seems substantial, there is still a distance for chip manufacturers to achieve a turnaround. It is expected that prices need to increase by another 40% to allow suppliers to cross the breakeven point. Therefore, prices are expected to be quite strong in the coming quarters.

Read more

• NAND Flash Industry Revenue Grows 2.9% in 3Q23, Expected to Surge Over 20% in Q4, Says TrendForce
• [Insights] Memory Spot Price Update: Modest DRAM Increase; NAND Flash 512Gb Premium Fades

(Photo credit: Samsung)

TrendForce releases the latest memory spot prices, with DRAM showing limited price increases due to sluggish trading momentum. On the other hand, NAND Flash is affected by inventory dynamics, leading to a gradual elimination of the premium for 512Gb. Details are as follows:

DRAM Spot Market:

In the spot market, the price decline caused by used chips extracted from decommissioned modules has shown signs of easing. The overall price trend is now relatively stable. With the winter holidays in North America and Europe, spot trading activities have slowed down. However, due to the market consensus that contract prices will rise in 1Q24, some buyers are stocking up, resulting in relatively insignificant increases in spot prices. The average spot price of mainstream DRAM chips (i.e., DDR4 1Gx8 2666MT/s) rose by 0.34% from US$1.747 last week to US$1.753 this week.

NAND Flash Spot Market:

Several suppliers, having witnessed the price hike of wafers that lasted for a few consecutive months, are starting to release their stocks since this week. The previous destitution in product availability has thus been slight remedied. 512Gb is currently sitting on about US$3.2, and is approaching to its contract price under a slow dissipation in premium, with the focus of subsequent observations being whether purchase dynamics would further deteriorate. 512Gb TLC wafer spots have risen by 1.72% this week, arriving at US$3.128.

In the latest financial report and guidance released on the 20th, U.S. memory chip giant Micron outperformed analysts’ expectations for both the last quarter and the current quarter. CEO Sanjay Mehrotra believes that product pricing will rebound next year, with the upward trend continuing until 2025, as Micron aims to return to a path of operational innovation and reach new record levels by 2025, according to The Economic Daily.

Mehrotra anticipates a price recovery in memory prices next year, and rise further in 2025. He reiterated in a statement that 2024 will be a year of recovery for the memory industry setting the stage for record results in 2025.

Micron expects the supply of PC, mobile devices, and other chips to approach normal levels in the first half of next year. Despite two consecutive years of declining PC shipments, Micron forecasts low to mid-single-digit percentage growth in 2024, with signs of a recovery in smartphone demand.

TrendForce also anticipates that the upward momentum in DRAM products is expected to continue until 2025.

The reason behind this is the continuous benefit to the DRAM market from the increasing penetration of premium products such as HBM, DDR5 and LPDDR5. This is expected to have a positive impact on the overall memory prices.

Simultaneously, TrendForce believes that 2025 will witness the emergence of more edge AI applications, such as AI on smartphones or PCs. This is expected to result in an increase in DRAM capacity, becoming the driving force for the next wave of growth in DRAM demand.

(Image: Micron)

Amid a gradual recovery in the memory market, South Korean memory giants Samsung and SK Hynix are reportedly set to expand their equipment investments significantly next year.

Samsung aims for a 25% increase in investment, while SK Hynix plans to more than double its investment compared to this year, concurrently increasing production capacity, sparking industry attention.

According to South Korean media outlet ETNEWS, both Samsung and SK Hynix are planning to boost semiconductor equipment investments in 2024. Samsung’s investment is estimated at around KRW 27 trillion (approximately USD 20.78 billion), representing a 25% growth, while SK Hynix plans an investment of around KRW 5.3 trillion (approximately USD 4.07 billion), signaling a 100% increase from this year’s investment.

As ETNEWS’ report revealed, in addition to increasing equipment investment, Samsung and SK Hynix have also raised their production capacity targets for 2024. Samsung plans to expand both DRAM and NAND Flash production by approximately 24%, while SK Hynix aims to elevate DRAM output to levels seen by the end of 2022.

Looking at market share, according to TrendForce’s released data, in terms of third-quarter revenue figures, Samsung holds approximately 38.9% market share in DRAM, while SK Hynix stands at 34.3%.

In the NAND segment, Samsung holds approximately 31.4% market share, while SK Hynix stands at 20.2%.

Market concerns arise as the memory industry, which has recently seen relief from the long-standing oversupply pressure due to major manufacturers reducing production, faces the possibility of disruption once again. Amid the rebound in prices, the significant investments planned by the two major South Korean companies are causing apprehension that the memory industry may face new challenges.

Memory industry sources believe that despite Samsung and SK Hynix’s plans to increase semiconductor equipment investment and boost production capacity in 2024, the tool-in still take time. Improving production capacity utilization is not an instantaneous process.

Furthermore, there is a general consensus in the industry that several AI-related applications in the future will require large-capacity memory support. For instance, the expected 3% growth in global smartphone shipments (based on TrendForce’s report) next year is anticipated to contribute to the expansion of demand in the high-value memory market.

TrendForce also pointed out that recent news about memory manufacturers expanding investment and increasing production capacity is primarily driven by the growing demand in the HBM market, rather than capacity expansion for all products.

Read more

• NAND Flash Industry Revenue Grows 2.9% in 3Q23, Expected to Surge Over 20% in Q4, Says TrendForce
• Contract Prices Bottom Out in Q3, Reigniting Buyer Momentum and Boosting DRAM Revenue by Nearly 20%, Says TrendForce

(Photo credit: Samsung)

Affected by the year-end and relatively sluggish demand, spot prices of DRAM and NAND Flash have shown a hovering trend this week. Details are as follows:

DRAM Spot Market:

With the year ending, some DRAM suppliers have released more their existing stocks into the spot market in order to lower their inventories further. As a result, spot prices of DRAM chips on the whole have fallen slightly. Currently, spot prices are still mostly hovering because buyers have yet to increase procurement quantities despite the rally of contract prices. The average spot price of the mainstream chips (i.e., DDR4 1Gx8 2666MT/s) rose by 0.11% from US$1.745 last week to US$1.747 this week.

NAND Flash Spot Market:

The spot market, bearing resemblances to that of DRAM, lacks drivers for a continuous increase in prices due to buyers’ stagnated purchase sentiment at the end of the year. Fortunately, the market is currently at a price correction phase as provision remains exceedingly restricted among suppliers due to their unchanged reluctance in sales. 512Gb TLC wafer spots have risen by 1.62% this week, arriving at US$3.075.