According to the latest investigations by the DRAMeXchange research division of TrendForce, NOR Flash buyers found that their inventories were low and stepped up their procurement efforts as they anticipated the growing risk of COVID-19 causing disruptions in the supply chain. These efforts sustained the uptrend of NOR Flash prices from 1Q20 to 2Q20. NOR Flash ASP climbed by around 5% QoQ in 1Q20 and increased even further, by about 10% to 20% QoQ in 2Q20.
Since NOR Flash buyers have been stocking up as a precaution against potential problems in the supply chain, their inventories are now quite sufficient. As well, although various governments have gradually begun to restart their economies due to economic pressures from extended lockdowns, retail consumer demand has yet to make a decent recovery. The outlook on NOR Flash prices in 2H20 is therefore bleaker; TrendForce expects NOR Flash prices to take a downturn in 3Q20.
As uncertainties in 5G demand grow, SLC Flash ASP, which is highly correlated with NOR Flash ASP, is expected to further decline in 2H20
TrendForce indicates that there has historically been a high degree of correlation between the prices of NOR Flash and SLC Flash. With regards to the supply and demand of SLC NAND, the demand for consumer electronics has been weakening since April. On the other hand, the market for networking devices, which also constitute a significant source of SLC NAND consumption, benefitted from the build-out of 5G infrastructure in China, and the visibility of related orders extends to the end of 3Q20. Nevertheless, the 5G infrastructure projects in Europe and North America are facing delays due to the pandemic’s impact. Additionally, the U.S. government has announced more export restrictions against Huawei and added FiberHome to the Entity List, effective since June 5. Although FiberHome can rely on its existing inventory to maintain operations for the time being, the latest sanctions by the U.S. will bring uncertainties to the anticipated progress of China’s 5G infrastructure build-out in 4Q20. TrendForce thus forecasts a minor decline in SLC NAND prices in 3Q20, with the decline expanding in 4Q20 due to the lack of demand.
Chinese manufacturers have noticeably ramped up both quantity and quality of NOR Flash memory because of its wide scope of applications
In the aspect of manufacturing technologies, the mainstream process for high-density NOR Flash products has advanced from the 65nm node to the nodes in the 50nm class, while low-density NOR Flash products are still being manufactured with the 65nm or the nodes of the earlier generations. Turning to applications, one of the most popular uses of NOR Flash in the recent years is TWS Bluetooth earphones (or earbuds). Each piece of Apple AirPods contains a 128MB NOR Flash chip, while the density of NOR Flash chips used in other TWS Bluetooth earphones ranges between 16MB and 64MB. On the other hand, IoT-related hardware also represents a considerable source of NOR Flash consumption. Since IoT-based devices are, for the most part, closed embedded systems, they do not require much memory. NOR Flash chips are therefore particularly well-suited for this application because they are concentrated in the lower end of the density range, including 8/16/32MB. As well, yet another significant application for NOR Flash can be found in AMOLED panels. A major issue associated with AMOLED panels is the mura effect (that is, uneven screen lighting), which is eliminated via de-mura codes. The codes that compensate for the mura defect and ensure a consistent quality for panels from the same batch are stored in a NOR Flash chip, usually 4/8MB in density.
In terms of the global top three NOR Flash suppliers by revenue, Macronix leads the pack in not only market share but also process technology. It is currently manufacturing with the 55nm node and has a production capacity of around 20,000 wafers per month. Macronix’s product lines for NOR Flash are very comprehensive and cover the entire density range. With respect to strategy, Micronix aims to benefit from the future demand related to the construction of 5G base stations. To that end, it has developed the 512MB chip as one of its main offerings. Such high-density solution is also very rare in the NOR Flash market. Windbond as the second leading supplier trails closely behind Macronix and currently manufactures with the 58nm and 90nm nodes. Windbond has a production capacity totaling about 18,000 wafers per month. Third-place GigaDevice, based in China, has made great strides with respect to raising output and product quality in recent years. Furthermore, GigaDevice is already recognized for its R&D capability as it has managed to capture orders for NOR Flash chips used in Apple AirPods. GigaDevice has a production capacity of around 9,000 wafers per month. Its wafer input is distributed between its foundry partners SMIC and HLMC. Worth mentioning is the fact that GigaDevice is a majority shareholder of CXMT, meaning it now possesses the capability to pursue R&D of both DRAM and NOR Flash and is expected to play a key role in the development of China’s semiconductor industry.