Memory market recovery into the countdown, Samsung and other chip factories take the lead

After a year-long price cut in half and a slow recovery, "SSD, memory prices" once again became a hot term.

On February 29, the interface news reporter browsing the Jingdong platform digital product area noticed that the latest price of a Jingdong self-operated Samsung 500G SSD SSD was 379 yuan, while the price of the product was only 199 yuan during the "618" period last year, an increase of nearly 1 times.

If you exclude the influence of big promoting factors, the price of the above products from May to July last year was stable at about 270 yuan, and the price changes in official channels such as Taobao and Pindioduo were also consistent with Jingdong.

Comparing Kingston, Kaixia, Western Data, Yangtze River storage and other brands in the past year of the main products, such as memory and solid state hard disk price trends can be found that from May to June last year, most of the head storage manufacturers touched the "floor price", and are now more than 50% higher than before, some products even more than doubled.

However, some industry insiders believe that the recent round of price increases is only the rebound of the market after the winter, and there is still some distance from the normal price level before the slump.

In the second half of 2022, global demand for consumer electronics such as smartphones and computers plummeted, storage market overcapacity, and supply far exceeds demand. DRAM (memory chips), NAND-Flash (flash memory chips) prices halved, and fell to the bottom in mid-2023. Solid state drives, memory prices are directly broken, a mainstream 1TB capacity solid state drive on the market, the listing price in 2021 is close to 1,000 yuan, and by June 2023, the direct 50% discount is less than 500 yuan. The price of memory chips has also fallen sharply.

After experiencing a huge decline, since the second half of last year, "no longer selling products at a loss" has become an industry consensus. Throughout the storage industry, from upstream chip factories to downstream module factories, the product supply side takes the lead in driving up prices.

Many industry insiders told interface news reporters that so far, the storage market has stopped falling and rebounded, mainly relying on the source of suppliers.

First, chip factories. Samsung, SK Hynix and Micron are the world's top three memory chip manufacturers, and the three companies have accumulated more than 95% of the world's DRAM and NAND-Flash orders.

Impacted by the slump in memory chip prices, the "storage three giants" all delivered the worst financial report in history. Samsung's net profit plunged 72 percent last year, and SK Hynix and Micron's net profit also fell sharply or even lost a lot.

To that end, all three companies have launched production cuts in the past year to stem price declines by running down customer inventories. Samsung has cut DRAM and NAND Flash chip production by 20% to 25% in 2023, and its production reduction plan will be implemented until the second quarter of this year, until the chip business completely returns to break-even. SK Hynix and Micron have also been exposed as having set a "break-even red line" for chip prices to stop falling and rise.

From the second half of last year to the beginning of this year, the three chip factories have been exposed to Kingston, Western Digital and other storage equipment customers issued a notice of chip contract price adjustment. According to semiconductor market research agency TrendForce forecast, chip manufacturers this year in order to reduce losses will first promote price increases, 2023 DRAM contract prices will rise in the first quarter of 13% to 18%, NAND-Flash is 18% to 23%, and will continue to rise throughout the year.

After the chip factory took the lead in raising prices, the cost of memory module equipment manufacturers such as Kingston, Western Digital, and Toshiba to purchase chips became correspondingly higher and had to follow up with price increases. Although the increase of the latter product is not the adjustment of the original chip factory, it will continue to rise this year.

A domestic distributor of Kingston told the interface news reporter that the current price rise of memory chips is a foregone conclusion. Chip factories are not in a hurry to ship, and plan to continue to pull up prices in 2024, which is expected to last about half a year, and will be further reflected in the public price of solid-state hard drives, memory chips and other products.

As for when the industry will usher in a recovery in demand and return to the balance point between supply and demand, there is no unified consensus and timetable, but AI has become a key element to stimulate demand.

The explosion of AI large models last year not only led to the skyrocketing demand for computing power, but also made the industry realize that more and more data needs to be stored, and HBM is regarded by the industry as the next generation of advanced storage technology to adapt to AI application scenarios.

HBM (High Bandwidth Memory) is a high bandwidth storage technology, the core process is through 3D stacking technology to connect multiple DRAM chips into one. The memory chip produced by this technology not only has high bandwidth and low power consumption, but also has high density and small space, which can store more data and transmit faster.

At present, SK Hynix, Samsung, Micron are fully producing the latest generation of HBM3 products to supply Nvidia to produce the most advanced AI server. A few days ago, the management of SK Hynix and Micron both said that due to short supply in the market, the company's HBM share in 2024 has been sold out.

The chief financial officer of a memory semiconductor company previously said in an interview with Interface news that the storage industry is expected to gradually move toward a recovery of supply and demand balance in the second half of this year. This round of recovery is mainly caused by the outbreak of AI to stimulate the demand for advanced storage of AI servers, AI mobile phones, and AI PCS, rather than relying solely on manufacturers to reduce production.