The turning point of the industry cycle is approaching when multiple listed companies cross border to lay out storage chips
Time:2023-07-16
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Source: Aiji Weibo Author: Qiu Xian
Recently, as the inventory of memory terminals has gradually dropped to a healthy level, the industry has successively reported that manufacturers are raising prices and the turning point of the cycle is approaching, which has attracted great attention from the market. The stock prices of Baiwei Storage, Jiangbolong, Demingli, Tongyou Technology, Shenzhen Technology and other companies have soared, reflecting that the Secondary market has taken the lead in launching a counter attack.
With the gradual reversal of the prosperity of the storage industry, domestic manufacturers of the storage industry chain have also accelerated the layout of the industry chain. In addition to manufacturers such as Zhaoyi Innovation, Ingenic Semiconductor, Dongxin Co., Ltd. and Puran Co., Ltd., Wanrun Technology, Liyuan Information, Shannon Xinchuang, Guoxin Technology and other manufacturers have also crossed into the storage concept, accelerating their breakthrough in the storage chip fields such as DRAM, NAND Flash.
The turning point of the storage chip market is approaching
After more than a year of decline, storage prices have finally stopped falling and consolidated, with some product models experiencing a slight rebound. Undoubtedly, both the original factory and the agent saw the dawn after enduring a long period of darkness.
In May this year, supply chain personnel revealed that the price of Yangtze Memory Technologies NAND rose by 3-5%. Samsung, SK Hynix and others also reported price increases. It is expected to drive DRAM prices up in the next quarter, with a target increase of 7% to 8%.
TrendForce pointed out that with the easing of inventory pressure from the original factory and the pre stocking before the peak season at the end of the year, it is expected that the demand for NAND Flash Wafer will gradually increase, which is expected to accelerate the supply-demand balance and continue the price rise. It is expected that in the third quarter, with a strong attitude towards original factory quotations, the average price of NAND Flash Wafer is expected to increase by 0-5% month on month.
However, the NAND Flash market is still in a state of oversupply, and buyers still hold a conservative stocking attitude, suppressing the price decline and stabilizing of NAND Flash. SSD, eMMC, UFS and other module products are expected to continue to decline in price due to delayed downstream customer purchases. TrendForce predicts that the overall NAND Flash average price will continue to decline by about 3-8% in the third quarter, and is expected to rebound in the fourth quarter.
In terms of DRAM, benefiting from the gradual reduction of production by DRAM suppliers, the overall supply of DRAM has decreased quarter by quarter. Coupled with seasonal demand support, the inventory pressure on suppliers has been reduced. It is expected that the decline in DRAM average prices in the third quarter will converge to 0-5%. However, at present, the annual inventory of suppliers should still be at a high level, and there is still great pressure for the increase in DRAM average prices this year. Although the reduction in production on the supply side helps to converge the quarterly decline, the actual time to stop the decline and rebound may need to wait until 2024.
Industrial Securities pointed out that the demand for storage chips remains relatively low, while on the supply side, with major manufacturers actively reducing inventory and production, the supply-demand relationship is expected to continue to improve. Based on the current supply and demand relationship, analysts believe that the storage industry is currently in the bottoming stage of prosperity and is expected to achieve a recovery this year. In the second half of the year, industry demand is expected to hit the bottom and rebound, and they are optimistic about the performance recovery trend of companies in related fields.
It is worth mentioning that in the first half of the year, AIGC was very popular, and the demand for AI servers increased significantly. The DRAM capacity required for AI servers was 8 times that of regular servers, and NAND Flash was 3 times that of regular servers, directly driving a significant increase in DRAM and NAND demand. In addition, the large dataset of AI models requires a larger capacity of NANDFlash to store data. It is reported that the number of parameters for GPT-3 has reached 175 billion, while GPT-4 requires more.
According to calculations by Dongwu Securities, the global AI server storage market size in 2023 is 8.1 billion US dollars, and it is expected to reach 49.2 billion US dollars by 2026. The CAGR from 23 to 26 is 82.5%, and the increment brought by AI servers is mainly reflected in the drive for high-capacity DDR, HBM, and SSD products.
In terms of in car storage, according to Yole data, the market size of in car storage reached $12.5 billion in 2027, with a CAGR of 20% from 2021 to 2027. With the ban on Meguiar products, the domestic substitution process in the field of in car storage will continue to accelerate.
Chen Yuenan, Director of Aiji Micro Consulting, stated that the current storage industry is still at the bottom of cyclical fluctuations. With the improvement of inventory situation and easing of price pressure in the first quarter of 2023, the storage industry cycle is expected to enter a turning point. Although short-term demand needs to recover, the rapid evolution of the AI big model led by ChatGPT has led to a surge in data volume, and the demand for AI servers and data centers continues to rise, driving the medium to long-term growth trend of the storage chip market.
Accelerate the localization of the storage industry chain
In addition to the market bottoming out and rebounding, Meiguang‘s products sold in China have not passed the network security review, and its customers will transfer orders to other domestic and foreign suppliers. The industry believes that this will be beneficial for the development of domestic storage industry chain enterprises.
According to IC Insights data, the top three in the global DRAM market share are Micron (45%), Beijing Sicheng (15%) and Samsung (11%). If Micron‘s business is limited, Ingenic Semiconductor, the leader of vehicle storage, is expected to benefit first; In the SLC NAND field, domestic leading Dongxin Co., Ltd. is expected to benefit.
In addition, according to CINNO data, Meguiar still holds about 4% of the global market share in NOR Flash, mainly used in fields such as automobiles, industrial control, and aerospace. If its business in China is limited, domestic NOR Flash leaders such as Zhaoyi Innovation are expected to accelerate product upgrades and accelerate the introduction of high-end applications.
Dongwu Securities believes that by observing the main players in the industry chain‘s production reduction actions, inventory and prices gradually bottoming out, the current storage industry has entered a bottoming stage, with expectations of a recovery from the valuation bottom. Moreover, under the catalysis of Meiguang‘s review and a small increase in the price of long-term NAND products, it is optimistic that the localization process of the storage industry will accelerate. Under the premise of a reversal of prosperity, the pattern is expected to present an accelerated localization situation in the future.
At present, domestic enterprises such as Zhaoyi Innovation, Fudan Microelectronics, Ingenic Semiconductor, Puran, Dongxin, Hengshuo, Xintianxia, Baiwei Storage, Jiangbolong, and Shenkonka are accelerating the layout of the storage industry, further improving the product structure, and improving their core competitiveness.
In addition to the traditional storage manufacturers mentioned above, manufacturers such as Wanrun Technology, Liyuan Information, Shannon Xinchuang, and Guoxin Technology have also entered the storage field across borders.
In 2022, Wanrun Technology established Hubei Changjiang Wanrun Semiconductor Technology Co., Ltd. with the aim of seizing the huge market opportunities generated by the large-scale expansion of domestic storage wafers and the domestic substitution of storage semiconductors, enabling the company to quickly enter the mid to high end storage semiconductor field, and cultivating and enhancing new momentum for the company‘s long-term development.
This year, Wanrun Technology has invested in the construction of the "Hubei Yangtze River Wanrun Memory Project" in Qingshan District, Wuhan. It plans to stage the construction of a memory research and development center, memory packaging, and testing project in Qingshan District. It stated that the storage semiconductor business is currently in its early stages of development and is actively engaged in product research and market development work; Some products have completed trial production, small batch production, and sample submission stages.
And Liyuan Information also stated on the investor interaction platform that the company‘s self-developed small capacity storage EEPROM product has been mass-produced; Guoxin Technology‘s highly reliable Raid storage control chip has been mass-produced and is currently collaborating with multiple relevant server manufacturers for application verification and development to achieve the industrial application of Raid chips.
In addition, Shannon Xinchuang, Junhai, Dapu Microelectronics and others jointly initiated the establishment of Haipu Storage, focusing on the enterprise level solid-state storage (SSD) product field; And Juchen Group has increased its investment in Yuxin Semiconductor, accelerating the layout of NAND and DRAM memory fields.
At present, domestic manufacturers are accelerating their layout of the storage industry, but due to the relatively late start of domestic storage manufacturers, there is still a significant gap between them and international giants. So domestic manufacturers can only achieve a steady increase in market share and a piece of cake in the high-end storage market by continuously increasing research and development investment, accumulating technology, and taking each step step step by step.
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