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2023/06/01
TrendForce reports that an amalgamation of off-season effects and high inflation caused a slump in purchasing enthusiasm in markets like North American server ODM and China This led to a surge in Q1 inventory levels for enterprise SSD suppliers, contrary to the anticipated reduction The situation was not remedied by a decrease in production either, forcing suppliers to resort to price cuts to boost shipment volumes Additionally, the strain from high inflation eroded purchasing momentum in these markets, instigating a simultaneous dip in both volume and price for enterprise SSDs This resulted in a significant 473% decline in Q1 revenue, reducing it to US$1998 billion However, after the Q1 inventory liquidation, there’s been a projected slight uptick in purchasing demand for server ODM orders in Q2 Consequently, enterprise SSD suppliers’ revenue is anticipated to revert to a growth trajectory in the second quarter
Kioxia rose to third place in Q1 despite its enterprise SSD revenue dropping 397% to approximately US$296 million TrendForce asserts that Kioxia’s long-term trajectory will be influenced significantly by the potential completion of its merger with WDC This merger could reshape future R&D strategies for enterprise SSD products WDC may shift its focus toward the development of client SSDs if further opportunities for integration arise Concurrently, Kioxia could channel more resources into enhancing customer verification processes This strategic reallocation of resources could bolster the shipment volume of enterprise SSDs, promoting growth in the sector
Samsung has been expanding its market footprint through aggressive pricing since 4Q22 However, significant revisions in server shipment targets for 2023 led to a contraction in Q1 demand for enterprise SSD orders, particularly from North American clients Consequently, Samsung’s Q1 enterprise SSD revenue fell to US$801 million, marking a QoQ decline of 55% Samsung’s Q2 revenue could experience a further dip as North American clients continue to make ongoing inventory adjustments, but a potential recovery is anticipated for the second half of the year
Notably, Samsung holds a competitive edge in technology with the launch of a 128-L PCIe 50 product As the penetration rate of Arm-based server platforms escalates and the demand for AI servers is projected to surge, Samsung’s market leadership hinges on aligning its product development to meet the transmission speed requirements of these burgeoning platforms
SK Group (SK hynix & Solidigm) also felt the impact of the general market slowdown, reporting Q1 enterprise SSD revenue of US$458 million—a QoQ decrease of 364% A resurgence in demand is anticipated as China’s overall inventory liquidation strategy and total procurement volume gradually stabilize This could result in SK Group’s Q2 enterprise SSD revenue growth rate and market share outperforming the average
WDC, battered by order cuts and a price war, has seen its enterprise SSD shipments curtailed, leading to a Q1 revenue of US$225 million—a staggering QoQ drop of 50% Furthermore, WDC’s current R&D pace for enterprise SSDs has lagged behind competitors with a notable decline in NAND Flash profits this year, leading to the company opting to trim capital investment This strategy may ultimately heighten competitive pressure on WDC’s enterprise SSDs As WDC’s primary North American clients increasingly shift to in-house manufacturing, the growth rate of enterprise SSD revenue could decelerate However, this slowdown could be mitigated if WDC successfully obtains approval for its PCIe SSD solutions from a wider range of clients
Micron experienced a downturn in Q1 due to a slump in server ODM demand, with its revenue falling to US$218 million—a QoQ decrease of 292% Despite being the first supplier to introduce a 176-L PCIe 40 product, the launch was hindered by slower-than-expected verification progress and tepid market demand, which led to delayed shipment of the new products TrendForce posits that Micron’s constraints in the Chinese market, which impact the shipment volumes of enterprise SSDs, necessitate an expansion of collaborations with clients in other regions In particular, the progress of verification with North American clients will be crucial and will largely dictate Micron’s revenue performance
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2023/05/09
TrendForce’s latest research indicates that, as production cuts to DRAM and NAND Flash have not kept pace with weakening demand, the ASP of some products is expected to decline further in 2Q23 DRAM prices are projected to fall 13~18%; NAND Flash is expected to fall between 8~13%
TrendForce reports that the significant drop in DRAM prices was mostly attributed to high inventory levels of DDR4 and LPDDR5 as PC DRAM, server DRAM, and mobile DRAM collectively account for over 85% of DRAM consumption Meanwhile, the market share for DDR5 remains relatively low
PC DRAM: Despite suppliers urgently reducing inventory, transaction volume has failed to increase due to the ample supply of DDR4 In contrast, prices for DDR5 are experiencing a far more moderate decline compared to DDR4 thanks to a tighter supply Overall, the ASP of PC DRAM is expected to decrease by 15~20% in 2Q23
Server DRAM: Weaker server demand has led to increased DDR4 inventory pressure on suppliers, with quarterly price declines expanding to 18~23% The supply of DDR5 has been constrained owing to PMIC compatibility issues, narrowing the price decline for server DRAM in 2Q23 to 13~18% However, given that DDR5’s market share remains low, its impact on price changes is limited, meaning the overall price decline in 2Q23 for server DRAM will remain between 15~20%
Mobile DRAM: Smartphone brands have finally finished correcting their memory inventories meaning a higher purchasing momentum compared to last year However, inventory pressure on suppliers continues to remain high, which means they are more willing to offer discounts Buyers have been merging Q3 demand with Q2 to increase their bargaining power, causing the ASP decline of mobile DRAM to expand to 13~18% in 2Q23
NAND Flash is primarily affected by enterprise SSD and UFS price drops, and the oversupply situation in the market has yet to be resolved These two products account for over 50% of total NAND Flash consumption
Enterprise SSD: Server demand continues to be revised downward, exacerbating inventory pressure on manufacturers Order volume in China has not significantly increased following the lifting of lockdown restrictions Orders for server ODMs have also struggled to grow due to high inventory levels, leading to the ASP decline of enterprise SSDs in 2Q23 to expand to 10~15% Demand for enterprise SSDs is expected to grow significantly in 2H23 as new platforms are released and inventory levels continue to fall
UFS: Smartphone brands have finally finished correcting their memory inventories meaning a higher purchasing momentum compared to last year However, inventory pressure on suppliers continues to remain high, which means they are more willing to offer discounts Buyers have been merging Q3 demand with Q2 to increase their bargaining power, causing the ASP decline of UFS to expand to 10~15% in 2Q23
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2023/04/14
TrendForce reports that the US Department of Commerce recently released details regarding its CHIPS and Science Act, which stipulates that beneficiaries of the act will be restricted in their investment activities—for more advanced and mature processes—in China, North Korea, Iran, and Russia for the next ten years The scope of restrictions in this updated legislation will be far more extensive than the previous export ban, further reducing the willingness of multinational semiconductor companies to invest in China for the next decade
CHIPS Act will mainly impact TSMC; and as the decoupling of the supply chain continues, VIS and PSMC capture orders rerouted from Chinese foundries
In recent years, the US has banned semiconductor exports and passed the CHIPS Act, all to ensure supply chains decoupling from China Initially, bans on exports were primarily focused on non-planar transistor architecture (16/14nm and more advanced processes) However, Japan and the Netherlands have also announced that they intend to join the sanctions, which means key DUV immersion systems, used for producing both sub-16nm and 40/28nm mature processes, are likely to be included within the scope of the ban as well These developments, in conjunction with the CHIPS Act, mean that the expansion of both Chinese foundries and multinational foundries in China will be suppressed to varying degrees—regardless of whether they are advanced or mature processes
TrendForce points out that since 1H23, there is a trend occurring where IC design companies are shifting existing and new orders to Taiwanese foundries under pressure from clients as well as their own need to minimize risks Tier-2 and -3 companies such as VIS and PSMC, which mainly focus on mature processes, have benefited greatly TrendForce believes that this shift in orders will undoubtedly ensure major recovery for foundries currently impacted by inventory adjustment and low capacity utilization rates, especially from 2H23 until 2024
TrendForce points that TSMC has been the most affected by this updated legislation, mostly due to their plans to expand into both China and the US TSMC’s current expansion into China, which began in 2022, has been focused on 28nm processes at Fab 16 The company has been continuously moving expansion-related equipment into China, and in October 2022, it obtained a one-year import permit The expansion is scheduled to be completed by mid-2023 However, based on the new CHIPS Act, TSMC’s further expansions for 16/12nm and 28/22nm processes at Fab 16 are limited for the next decade upon receiving the US subsidies Furthermore, 85% of the output must meet local market demand in China US export regulations require multinational foundries to apply for equipment import permits, which will reduce TSMC’s willingness to continue investing in China
Plans to expand memory production will focus on South Korea and the US, and China’s share of global DRAM capacity will decline YoY
The new CHIPS Act mainly applies to processes more advanced than 18nm, which is equivalent to 1Xnm for major suppliers However, mainstream DRAM processes have already been upgraded to above 1Znm, and customers are gradually transitioning under encouragement from suppliers; only a small portion of consumer DRAM products continue to remain below 1Xnm However, consumer DRAM products only account for 8% of total capacity SK hynix is the only major supplier to have a fab in Wuxi, China, but factors such as oversupply and geopolitics have caused DRAM output at the Wuxi fab to drop four percentage points from 48% to 44%, and their new fab is set to be located in South Korea Meanwhile, Samsung and Micron have no DRAM capacity in China and their plans for future expansion will focus on South Korea and the US, respectively TrendForce estimates, based on the plans of these three suppliers, that South Korea’s share of global DRAM capacity will continue to rise while China’s will decline YoY, dropping from 14% to 12% by 2025
When it comes to the supply of NAND Flash, the US has stated that restrictions on expansion mainly apply to processes with fewer than 128 layers Samsung’s Xi’an fab continues to focus on 128-layer processes and accounts for approximately 17% of global NAND Flash capacity; the Intel fab in Dalian, which was acquired by SK hynix, accounts for 9% of global NAND Flash capacity However, Samsung and SK Hynix are unlikely to expand their old production lines as 128-layer products will clearly be unable to compete with more advanced ones The plans involving upgrading process technology and raising production capacity at manufacturing operations in China will be severely limited All in all, China’s share of global NAND Flash capacity is expected to drop from 31% to 18% by 2025
Demand for DRAM and NAND Flash are in the same boat; many US companies have begun restricting production regions for memory and storage products or are requiring foundries to move their production facilities out of China to avoid geopolitical conflicts TrendForce predicts the formation of two distinctive production regions: Chinese factories that primarily focus on meeting domestic demand, and factories outside China that will serve other markets
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2023/03/30
Although NAND suppliers have continued to roll back production, there is still an oversupply of NAND Flash as demand for products such as servers, smartphones, and notebooks is still too weak Therefore, TrendForce predicts that the ASP of NAND Flash will continue to fall in 2Q23, though that decline may shrink to 5~10% The key to supply and demand returning to a market equilibrium lies in whether NAND suppliers can cut back on production even more TrendForce believes if demand remains stable, then the ASP of NAND Flash will have an opportunity to rebound in 4Q23; if demand is weaker than expected, then ASP will take longer to recover
Client SSD: Currently, PC OEM’s have managed to liquidate most of their component inventory, and are now gearing up in preparation for mid-year sales events Suppliers are cutting prices to clear out their inventories of PCIe Gen 3 SSDs, which are gradually being phased out Meanwhile, prices of PCIe Gen 4 SSDs continue to face downward pressure due to a slow intake of new customer orders The continuous decline of QLC products in 1Q23 has also dragged down the prices of TLC products, and there is relatively little room for prices to keep falling in 2Q23 While it still remains unclear whether or not demand will recover, TrendForce projects that the prices of PC client SSDs will drop 5~10% in 2Q23
Enterprise SSD: TrendForce predicts that demand from Chinese CSPs will steadily increase as a result of China’s annual Two Sessions gathering In addition, the launch of AMD Genoa will continue to drive shipments of enterprise SSDs It is expected that prices will continue to fall in 2Q23 as supply exceeds demand; suppliers have sustained significant losses from sales, which has weakened their ability to negotiate TrendForce estimates that the price decline of enterprise SSDs will narrow to 8~13% in 2Q23
eMMC: Demand for small-capacity eMMCs has remained stable while demand for large-capacity products has been impacted by weak NB and smartphone markets Aggressive price undercutting between module houses has significantly driven down prices of small-capacity eMMCs in 1Q23, leaving not much room for further downwards movement next quarter Large-capacity eMMCs will experience a greater decrease in prices due to being linked to smartphone UFSs of the same capacity, even as suppliers actively push for sales TrendForce predicts that eMMC prices will decline by 5~10% in 2Q23
UFS: NAND suppliers will continue to push for sales of large-capacity UFSs to encourage customers to upgrade the storage capacity of their smartphone products The introduction of UFS 40 means that many flagship smartphone models will be seeing an upgrade in storage capacity Meanwhile, inventory levels of smartphone components have mostly returned to normal levels, and suppliers are debating whether to stock up for mid-year sales events and peak season demand in 2H23 TrendForce believes that suppliers may accelerate the bottoming of UFS prices as buyers decide how much they wish to purchase in the next quarter It is estimated that UFS prices in 2Q23 will fall between 8~13%
NAND Flash wafer: Inventory levels in module houses have returned to normal Module houses are gradually purchasing more components and creating low-price inventory—operating under the belief that demand for SSDs, memory cards, disks, and other products will recover in 2H23—in order to avoid absorbing inflated costs when prices rebound in the future NAND suppliers have managed to limit overstock by controlling bit output through delaying their transition to new processes and reducing wafer starts As a result, NAND Flash wafer contract prices are seeing shrinking declines TrendForce reports that NAND suppliers that have already implemented production cuts have had their contract prices fall to cash costs, and have avoided further losses from price cutting TrendForce estimates that contract prices of NAND Flash wafers in 2Q23 will largely level out
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2023/03/06
Looking back at 2H22, as server OEMs slowed down the momentum of their product shipments, Chinese server buyers also held a conservative outlook on future demand and focused on inventory reduction Thus, the flow of orders for enterprise SSDs remained sluggish However, NAND Flash suppliers had to step up shipments of enterprise SSDs during 2H22 because the demand for storage components equipped in notebook (laptop) computers and smartphones had undergone very large downward corrections Compared with other categories of NAND Flash products, enterprise SSDs represented the only significant source of bit consumption Ultimately, due to the imbalance between supply and demand, the QoQ decline in prices of enterprise SSDs widened to 25% for 4Q22 This price plunge, in turn, caused the quarterly total revenue from enterprise SSDs to drop by 274% QoQ to around US$379 billion TrendForce projects that the NAND Flash industry will again post a QoQ decline in the revenue from this product category for 1Q23
Regarding NAND Flash suppliers’ performances in the enterprise SSD market in 4Q22, Samsung posted a drop in revenue to US$178 billion but also managed to raise its market share to 469% Moving into 2023, Samsung will fend off challenges from its rivals and remain firmly as the leader in the enterprise SSD market This is because Samsung has a well-rounded range of offerings and maintains a technological lead Also, PCIe 50 will be incorporated into some new server platforms that will arrive in 2H23, and Samsung has already sent samples of its PCIe 50 products to customers for qualification Additionally, the demand related to high-performance computing (HPC) is rising because of the proliferation of applications and services supported by artificial intelligence (AI) technologies Consequently, orders for products featuring high bandwidth memory (HBM) is gradually increasing as well Facing these new developments, Samsung has formulated effective product strategies for not only SSDs but also DRAM and HBM Therefore, it is in a stronger position compared with its competitors
SK Group’s (ie, SK hynix and Solidigm’s) revenue from enterprise SSDs came to around US$720 million for 4Q22 Because of the slump in China’s demand throughout 2022 and the delay in the launching of its new products, SK Group saw its market share for enterprise SSDs shrink to 190% in 4Q22 According to SK Group’s original plan, following the completion of the first phase of the merger between SK hynix and Solidigm, the development of SSD offerings would be mainly done by Solidigm With these joint efforts, SK hynix initially intended to launch 176L TLC enterprise SSDs within 2023 However, TrendForce’s latest investigation finds that some changes have been made to this collaboration strategy This will negatively affect both SK hynix and Solidigm with respect to the development and mass production of new products Their shipments could suffer as well This year, SK Group will depend on the anticipated demand recovery in the Chinese market to raise its market share for enterprise SSDs Besides this, the progress on the adoption of its QLC enterprise SSDs will also be a crucial factor influencing its long-term shipment performance
WDC’s revenue from enterprise SSDs began to climb noticeably in 2Q22 thanks to the adoption of its PCIe products among North American server ODMs Nevertheless, WDC still posted a QoQ drop in revenue for 4Q22 to US$493 million due to the contraction of North American customers’ procurement quantities On account of its limited resources for R&D, WDC lags behind its competitors in the launching of PCIe 40 enterprise SSDs Hence, there are some concerns about its ability to expand market share in the future Furthermore, the NAND Flash industry on the whole will begin releasing PCIe 50 solutions during 2H23 so as to complement the market growth of new CPU platforms Compared with other NAND Flash suppliers, WDC appears to be slightly less prepared for the arrival of PCIe 50 In sum, WDC will likely experience more difficulties in maintaining its market share during 2023
Kioxia’s performance in 4Q22 mainly benefited from its status as the main supplier for SAS SSDs Because SAS products have a higher unit price compared with PCIe products, Kioxia was able to somewhat limit the QoQ decline in its revenue despite the lower-than-expected order volume Kioxia’s revenue from enterprise SSDs fell by 122% QoQ to around US$491 million for 4Q22 Going forward, Kioxia will accelerate the qualification of its PCIe 40 SSDs among server OEMs and expand the presence of these products in China Therefore, shipments of its PCIe 40 enterprise SSDs are expected to be on a gradual climb this year As for PCIe 50 SSDs, Kioxia already pushed them into the mass production phase and is actively seeking server ODMs’ cooperation in promoting the adoption of these products By achieving a stronger sales performance in the enterprise SSD market, Kioxia hopes to raise its overall profit and thereby obtain the resources that it needs to improve its NAND Flash manufacturing process Presently, Kioxia aims to catch up to other suppliers in the race to attain the 23X-L technology by 2024
Micron’s revenue from enterprise SSDs fell to US$308 million for 4Q22 owing to two factors First, SATA products still accounted for the majority of Micron’s enterprise SSD sales Second, server OEMs scaled back capital expenditure for 2H22 Turning to its performance in 2023, shipments of its 176L PCIe 40 SSDs have been a bit weaker than expected However, more of its clients have completed the qualification of 176L products, and buyers on the whole have been making steady progress in consuming the existing inventory Therefore, Micron can expect a surge in shipments of 176L products during 2H23 In the aspect of product development, Micron is ramping up efforts to build new products featuring HBM and the next-generation interfaces so as to capture opportunities related to the emerging new services powered by AI, machine learning (ML) and HPC It is also raising the adoption of its enterprise SSDs by expanding its collaborations with server ODMs
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
