Semiconductor recovery

At the end of the Spring Festival holiday, a semiconductor industry analysis article from Mr. Takashi Tang caught our attention. First of all, we have to understand that 2024 is known as the year of the global semiconductor market's full recovery, which is a good opportunity for all friends who care about the semiconductor industry.

World Semiconductor Market Statistics (WSTS) data show that in 2022, the semiconductor industry reached its highest point in history during the epidemic period, and the total amount of global semiconductor products shipped broke a record to 573.2 billion US dollars, while demand fell in 2023, the year-on-year value fell to 520.1 billion US dollars. In 2024, WSTS expects the semiconductor market to rebound as a whole, with total shipments exceeding 2022 and reaching an all-time high, expected to reach $588.4 billion.

Mr. Tang Takashi pointed out that the full rebound of the semiconductor industry in 2024 is the key to the market rebound of memory chips. The reasons are as follows:

The semiconductor chip market can be subdivided into: Mos Micro (microelectronics processing chip), Mos Memory (memory chip), logic (logic chip) Analog (analog chip). From the chart below, in addition to memory chips, the total product shipments of the remaining three chip areas showed signs of recovery compared with the previous year. And is expected to sprint the highest shipment amount in history.

Start with the memory chip market

The memory chip market is a relatively single variety, a high degree of standardization, relying on large-scale production of the chip market. The sooner the memory chip manufacturers occupy the main market, they have become the big MAC that divides the "cake" of the storage market. For example, Samsung, Hynix, Micron storage three giants, their total market share in the world DRAM storage market reached 96%, other companies have no chance to challenge.

The memory chip market, after breaking through the highest shipment amount in history in May 2022, fell rapidly, and the data in November 2023 was less than 65% of the peak period. Mr. Yutaka believes that when the memory chip market returns to its peak, the semiconductor market will usher in a true global recovery.

When to return to the top

When will the memory chip market return to its peak? By analyzing the price changes and business conditions of DRAM and NAND flash memory chips, Mr. Yutaka determines the actual recovery of the semiconductor market and the development trend of the world's major manufacturers of memory chips.

DRAM market and NAND market

First of all, Mr. Yutaka first analyzed and compared the quarterly shipments of two types of memory chips. In the second quarter of 2022, both DRAM and NAND memory chip products reached historic peaks.

DRAM reached $25.59 billion in the second quarter of 2022. Since then, the total volume of global shipments has declined rapidly, and by the first quarter of 2023, the total volume of DRAM shipments has become 38% of the peak, falling to the bottom. It rebounded to 53% of its peak in the third quarter of 2023.

NAND, on the other hand, also recorded a total shipment of $18.12 billion in the second quarter of 2022. Since then, it has also fallen to 48% of its peak in the first quarter of 2023, falling to a trough of $8.63 billion. But NAND's rebound momentum is obviously not as strong as DRAM, only a slight increase in the third quarter of 2023.

The same category of memory chips, why is there such a big difference in the recovery speed?

Since the total shipment of memory chips is determined by the product price and the shipments of various major manufacturers, Mr. Yutaka has analyzed the price changes of these two memory chips.

According to industry data from Taiwan-based research firm TrendForce, DRAM prices and NAND prices both fell in the first to third quarter of 2023 compared to the previous quarter, but the decline in DRAM was smaller than that of NAND. Mr Yutaka thinks this may be one reason why DRAM is recovering faster than NAND. Starting from the fourth quarter of 2023, both DRAM and NAND prices are rising, which is also expected to usher in a full recovery in 2024 memory chips this year.

The performance analysis of major mainstream memory chips

Among the major DRAM manufacturers, Korea's SK Hynix (Hynix) has rebounded surprisingly fast. Samsung, which ranks first in the business list, has not rebounded as fast as Hynix. Micron, another memory chip giant, has seen few signs of a rebound.

What is the reason for SK Hynix's rapid rebound? Originally, in November 2022, Open AI released the artificial intelligence software ChatGPT, so far, the generation of AI technology and demand has exploded in the world. AI semiconductor company Nvidia's GPU has since become indispensable. SK Hynix is the world's largest supplier of High Bandwidth Memory (HBM) for Gpus. With the crazy demand for generating AI and Gpus, SK Hynix also got a lot of orders.

In the future, the pattern of the world DRAM three people may undergo subversive changes. As HBM is the main market for DRAM development in the future, Hynix, which has already taken the leading position in this market, is likely to buck the trend and surpass the traditional leader Samsung. According to the current data, the proportion of global sales, Samsung first 38.9%, and SK Hynix surpassed Micron (Micron), and continue to narrow the gap with Samsung, as of the third quarter of 2023, SK Hynix share has reached 34.3%, and Samsung only 4.6% gap.

Around the DRAM market HBM

First Nvidia's "A100" and "A800" Gpus, all DRAM, are currently HBM2e. SK Hynix and Samsung's Roadmap shows that both companies have launched a sample release of HBM3e in the first quarter of 2024. SK Hynix will begin mass production in the second quarter of 2024, while Samsung expects mass production in the third quarter. Micron, on the other hand, will skip the HBM3 series and start directly with HBM3e development, which is expected to begin volume production in 2Q24.

The reason why the storage three companies have to work hard in HBM is because of their high prices. It is also important to know that the unit price of HBM is more than 10 times more expensive than the unit price of DRAM used in PCS with the same capacity. The huge interest space drives major manufacturers to frantically develop HBM products. Even if the average yield of HBM is less than 50%, the huge profit margin has filled the disadvantage of low yield in this field. If AI generation continues to gain momentum, SK Hynix could overtake Samsung.

The same is true of the NAND market, after experiencing the peak in 2022, the first quarter of 2023 fell to the bottom, and then bottomed out, and this time it is still SK Hynix strong rebound.

Brief summary

Learning this masterpiece of Mr. Takashi Yutaka, combined with the judgment of the market development trend of the semiconductor industry, we can refer to the following simple model.

1.Analyze the memory chip market. Because the memory chip market is a relatively single variety, relatively high degree of standardization, relying on large-scale production of the chip market, and most of the output is concentrated in the hands of the three storage companies (Samsung, SK Hynix, Micron). Therefore, we can draw a targeted picture of the market trend in the past few years by focusing on the analysis of the Roadmap, shipment volume and turnover of the three major products.

2. Combined with the current adoption of key chip (HBM) in hot application fields, research the development of related enterprises in hot application fields, and then predict the situation of enterprises in the next 3-5 years.

3. Use the latest statistics and tables such as World Semiconductor Market Statistics (WSTS) to find companies and products with outstanding performance and high volatility recently. Seek the essential reason of its change. Predict the future trend of semiconductor market.

In 2024, the semiconductor industry or usher in a new growth, has been deposited more than a year of the chip industry, in the next year, can go against the current, create a new miracle, let us wait and see. At the same time, we should also be cautiously optimistic that the global semiconductor market in 2024 is still affected by the global situation and weak demand from end customers, but the semiconductor industry has a new round of recovery and a leap in the near future.