Since the semiconductor industry entered a downward cycle, the market trend has shifted from a situation of "both quantity and price rising" to a situation of "quantity increasing and price falling". Relevant manufacturers have had to implement inventory adjustment, production reduction and other strategies in a multi pronged manner, striving for supply-demand balance.

With the significant reduction in production by the original factory, terminal applications such as smartphones and PCs have gradually stabilized and restarted, driving the bottom of the storage chip market to rise.

The industry believes that from next year, the development of storage chips, silicon wafers, MCUs and other fields will be uneven, but they will all lead to the same goal, and the semiconductor industry may see an increase in the near future.

A wave of rising prices for storage chips is coming, and Western Data is issuing a price increase notice?

Recently, Taiwan, China Economic Daily reported that Western Digital sent a price rise notice letter to customers and expected that the price of NAND chips would rise periodically in the next few quarters, and the cumulative increase might be more than 50% or 55% higher than the current quotation.

The industry is optimistic about the current situation where prices have stopped falling and rebounded. Compared to the current situation where suppliers and customers individually notify and adjust prices, Western Data has issued a price increase letter to customers, and it is expected that the price increase will be astonishing. This is the first shot of a comprehensive price increase in the business world.

The price increase notice letter from Western Data reveals that the wave of NAND chip price increases is unstoppable, coupled with some demand recovery and customer initiated inventory stocking, the "price and quantity increase" is gradually reflected in the revenue performance of relevant manufacturers.

In early November, South Korean media quoted several sources in the semiconductor industry as saying that Samsung had decided to increase its NAND chip price by another 20% in the first and second quarters of next year, after raising the price by 10% to 20% this quarter. This move is Samsung's effort to stabilize NAND chip prices, with the goal of reversing the market in the first half of next year.

From the perspective of the two major storage chips, according to industry sources cited by the media, NAND flash memory spot prices continue to rise, while DRAM pricing trends are not very stable. As the peak season approaches its end, the growth of storage spot prices slowed down in November this year. Due to continuous production cuts by chip manufacturers, upstream NAND supply remains tight, and storage module manufacturers are unable to establish sufficient inventory before prices further rise. However, channel inventory pressure has not prevented NAND flash wafer prices from rising. The strong rise in spot prices in the mainstream 512Gb market further drives chip suppliers to achieve balance of payments.

In terms of DRAM, according to a survey conducted by global market research firm TrendForce on December 4th, looking ahead to the fourth quarter, in terms of supply, the attitude of original factory price increases is clear, and it is estimated that DRAM contract prices will increase by about 13-18% in the fourth quarter; The degree of demand recovery is not as good as in the past peak season. Overall, although buyers have stocking needs, currently, due to high inventory levels in the server sector, the attitude towards stocking remains passive, and the growth rate of DRAM industry shipments in the fourth quarter is limited.

DRAM manufacturer NanaKe believes that it has been observed that the price of DDR5 specification DRAM is starting to rise, and the price of DDR4 is also beginning to stabilize under the protection of major factories. It is expected that the prices of DDR4 and DDR3 will have a slight improvement in the fourth quarter.

In terms of NAND Flash, TrendForce Consulting stated that by the end of the third quarter, the negotiation direction of NAND Flash contracts had shifted towards stopping the decline or even increasing prices. Looking ahead to the fourth quarter, NAND Flash products will increase in both quantity and price, and it is estimated that the average selling price of the entire product will increase by 13%. The overall revenue growth of the NAND Flash industry is expected to exceed 20% month on month.

In addition, Chen Libai, Chairman of storage module manufacturer Weigang, stated a few days ago that it is expected that NAND Flash inventory will be depleted by the end of this year or the end of January next year, and it is expected that DRAM and NAND Flash may be in short supply next year.

The demand for downstream chips such as CIS and storage is increasing, and the recovery period of 12 inch silicon wafers may be ahead of schedule

In recent years, downstream applications such as 5G, automobiles, and industry have driven up demand in the industry chain. After experiencing an unprecedented boom in signing contracts and expanding production for a period of time, 12 inch silicon wafers have encountered a new crisis. Since the semiconductor industry weakened, the wave of sluggish demand from consumer terminals has spread to wafer foundry and silicon wafer ends, with 12 inch silicon wafers also being significantly affected. Previously, industry insiders estimated that 2022 would be the year with the most similar global supply and demand for 12 inch silicon wafers in the past three years. From 2023 to 2025, 12 inch silicon wafers will fall into oversupply, and it is expected that demand will turn into oversupply in 2026.

However, as the trend of rising prices for some chips blows, 12 inch silicon wafers that rely on demand in the three major fields of storage, logic chips, and CIS will also benefit. In addition to the NAND chip price increase notice released by Western Data mentioned earlier, according to media reports, Samsung Electronics has already issued a CIS price increase notice to customers, and will increase its CIS product prices in the first quarter of next year, mainly involving products with specifications of 32 million pixels or more, with an average increase of 25%, and a 30% increase in some products.

The industry believes that starting from the second half of this year, the inventory of mobile phone brand factories has gradually approached a healthy level and begun to replenish inventory, which has significantly reduced the CIS inventory level. This is the main reason why Samsung is planning to raise prices for related CIS products in 2024.

In addition, according to the Taiwan, China Industrial and Commercial Times, storage manufacturers will resume procurement in the second half of 2024, and the prosperity of the 12 inch silicon wafer industry will recover in the second half of 2024. However, the year-on-year growth rate of the 12 inch silicon wafer shipment area may be lower than the industry average.

It is understood that semiconductor silicon wafers, also known as silicon wafers, are the cornerstone material of over 90% of semiconductor devices worldwide. Silicon wafers are the semiconductor material that runs through every process of the chip and accounts for the largest proportion of cost. As the size of silicon wafers increases, the number of chips that can be manufactured increases, leading to a decrease in unit chip costs. Advanced processes worldwide use 12 inch silicon wafers, making them the mainstream trend.

12 inch silicon wafers are high-quality upstream materials in the semiconductor industry chain and an indispensable key material for all advanced semiconductor manufacturing plants. They are mainly used in the production of high computing power logic chips (CPU, GPU, FGPA), DRAM memory, 3D NAND memory and other high-end fields. The terminal application fields are in smartphones, PCs, tablets, servers, TVs, gaming cars, cloud computing, artificial intelligence, and so on.

Domestic manufacturers in the field of 12 inch silicon wafers include Shanghai Silicon Industry, Zhonghuan Shares, Lyon Microelectronics, Zhongxin wafers, and others. From the recent dynamics of domestic manufacturers, Lyon Micro expects the Jinruihong 12 inch light doped silicon project to be put into operation next year. Lyon Micro Chairman Wang Minwen stated at the third quarter performance briefing at the end of November that the Jiaxing Jinruihong annual production capacity of 1.8 million 12 inch light doped polishing chips project is expected to be completed by the end of the third quarter of 2024. Currently, sales are mainly focused on test chips, and the 12 inch semiconductor silicon wafer technology capabilities have covered logic circuits and storage circuits of technology nodes above 14nm, as well as image sensor devices and power devices required by customers.

The main body of silicon wafer production, Jinruihong, has four silicon wafer production bases, including Zhejiang Jinruihong Technology Co., Ltd. located in Ningbo, as well as Jinruihong Technology (Quzhou) Co., Ltd., Jinruihong Microelectronics (Quzhou) Co., Ltd., and Jinruihong Microelectronics (Jiaxing) Co., Ltd. located in Quzhou. The products cover 6-12 inch semiconductor silicon polished wafers and silicon epitaxial wafers. Among them, Zhejiang Jinruihong has the production capacity of 6-8 inch semiconductor polishing and epitaxial wafers, Jinruihong Technology mainly produces 8-inch polishing and epitaxial wafers, and Jinruihong Microelectronics (Quzhou and Jiaxing) mainly engages in the 12 inch semiconductor silicon wafer business.

Zhongxin wafer released a 12 inch semiconductor ultra-thick film epitaxial wafer in mid November. Zhongxin wafer is mainly engaged in the research and development, production, and manufacturing of high-quality semiconductor wafers for integrated circuits, committed to becoming one of the main suppliers of semiconductor wafers worldwide. Zhongxin wafer factories in three locations have achieved complete production from semiconductor single crystal silicon rod drawing to 100mm~300mm semiconductor wafer processing. They now have 9 8-inch production lines and 2 technologically mature 12 inch production lines, with an annual production capacity of 2.4 million pieces/300mm, 4.8 million pieces/200mm, and 4.8 million pieces/150mm.

The competitive situation of bargaining is no longer present, and the MCU market remains conservative

According to Taiwan, China's Zhongshi News Network, the overall MCU market is still conservative. At present, only the high-end MCU market is stable, and the low-end 8 bit MCU market is still very depressed. From the channel side, we can see that the inventory is in continuous decline. However, in terms of demand, the volume of goods pulled by channel vendors in the third quarter is still low compared to the second quarter, and the fourth quarter will be lower than the third quarter.

Due to poor overall demand, MCU manufacturers have expressed that they will continue to reduce the number of chips to control inventory in the future. The industry believes that the market situation for MCU is approaching the bottom, but due to the lack of improvement in demand, from the perspective of application products, only the demand for health measurement has warmed up, and such demand needs to be continuously observed, while there are no obvious signs of warming up in other applications.

In September, news of changes in the MCU market came, and companies leading the price reduction in the microcontroller (MCU) market gradually stopped their strategy of cutting prices and clearing inventory, and some categories even began to increase prices. From the perspective of delivery time, according to previous statistics from Fuchang Electronics, the delivery time of 8-bit and 32-bit MCUs from international major manufacturers has continued to decline since September, with prices remaining unchanged month on month. The prices of some models of STMicroelectronics have fallen to the level before the 2021 shortage price increase. In September, prices still slightly decreased compared to the previous month, but the decline has significantly narrowed. However, NXP stated that the downward trend in low-end MCU prices in China has not changed.

According to MoneyDJ, General Manager of Shengqun, Gao Guodong, stated at the end of October that the competitive situation of MCU's price reduction is no longer strong, but the unit price has already bottomed out. The company continues to research and develop in areas with higher functionality during the downturn. However, the price of the newly invested Wafer will be relatively low, and the impact on gross profit margin is inevitable. However, overall, the fourth quarter is in a period of bottoming out adjustment, and it is hoped that there will be a dawn of prosperity next year.

Zhongying Electronics stated at the end of November that the visibility of orders was not high. The market recovered slightly in the fourth quarter, with incremental orders from white goods and small home appliance MCUs. The first quarter of next year is uncertain. Inventory is expected to be effectively digested next year, and progress depends on the strength of the recovery of terminal demand. And it is pointed out that home appliance MCUs and lithium battery management chips have remained relatively stable after price reductions at the beginning of the year. Recently, some peer companies have raised prices for home appliance MCUs. Lithium battery management chips are relatively affordable due to the scarcity of TI and their involvement in safety.

The industry has stated that MCU manufacturers are shifting their focus to the automotive and industrial control sectors, while also intending to continue diversifying their expansion into European, American, and Asia Pacific markets. Looking ahead to MCU in 2024, it appears that its operations have bottomed out. However, given the low visibility of orders, it is still difficult to predict when a sustained recovery will arrive.