A stone hitting water will always stir up a thousand waves. Recently, the storage chip market has once again experienced ripples. In addition to rising chip prices and shortages of some products, the two major storage manufacturers Samsung and SK Hynix have further increased equipment capital expenditure and production capacity in response to future market conditions. The industry believes that the series of measures taken by these two companies in response to future market conditions will affect overall market changes.

Two major original factories plan to increase equipment expenditure and production capacity next year

According to South Korean media ETNews on the 18th, two major storage manufacturers, Samsung and SK Hynix, are planning to increase investment in semiconductor equipment next year. Samsung Electronics plans to invest about 27 trillion Korean won, while SK Hynix plans to invest about 5.3 trillion Korean won; Compared to this year, the investment amount has increased by 25% and 100% respectively.

At the same time, in addition to increasing equipment investment capital, the two companies have also increased their shipment volume for next year. Samsung plans to expand DRAM and NAND production by approximately 24% respectively, while SK Hynix plans to expand production, focusing on cutting-edge DRAM such as HBM, and increasing DRAM production to levels before the end of 2022.

According to a December survey by TrendForce Consulting, Samsung's production reduction in the DRAM field will expand to 30% in the fourth quarter, resulting in a decline in total film production. Samsung believes that demand during the peak season of 2024 will pick up, so film production will begin to increase in the second quarter of next year. SK Hynix has benefited from the growth of HBM and DDR5 shipments, resulting in a slight increase in production capacity. The number of pieces put in will slightly increase by the end of this year, and combined with the increased penetration of DDR5 at the terminal next year, it is expected that the total number of pieces put in will increase quarter by quarter.

SK Hynix recently revealed at the IEDM 2023 Global Semiconductor Conference that its hybrid bonding process for HBM manufacturing has obtained reliability certification. SK Hynix's third-generation HBM (HBM2E) stacks DRAM into 8 layers and passes all aspects of reliability testing after being manufactured using a hybrid bonding process.

According to a study by TrendForce Consulting, in the third quarter of 2023, Samsung held the world's first place in the NAND Flash market with a market share of 31.4%, followed by SK Group (SK Hynix+Solidigm) with a market share of 20.2%; In the DRAM market, Samsung (38.9%) still ranks first, while SK Group (34.3%) ranks second.

The industry believes that the reason why the two companies have increased equipment investment and production is to prepare for improving industry conditions. Although the uncertainty of the global economy still exists, there are various interpretations that suggest that the storage industry has bottomed out this year and a recovery is imminent.

In addition, Morgan Stanley stated that AI (artificial intelligence) on devices will create new demand. AI requires large capacity memory, which also plays a role in expanding the demand for high-value memory in the market.

Continuous rise in storage chips

The storage chip market, which has a huge impact on the semiconductor industry, has been closely monitored for its future trend since its rise in the fourth quarter. With the implementation of the original factory production reduction strategy this year, coupled with the increasing demand for AI and high-performance computing in the market, the storage market has begun to move towards an upward phase. From the increased investment and production capacity of the original factories mentioned above, it can be seen that the industry is still optimistic about the recovery of storage chips.

From the perspective of market prices, TrendForce Consulting pointed out that in terms of supply, the original factory's attitude towards price increases is clear, and it is estimated that the DRAM contract price 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.

In addition, TrendForce Consulting stated that 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.

And NAND Flash products will increase in both quantity and price. TrendForce Consulting estimates that the average selling price of the entire product will increase by 13%, and the overall revenue growth of the NAND Flash industry is expected to exceed 20% month on month.

Looking ahead, TrendForce Consulting predicts that in the first quarter of next year, driven by the continuous stocking of mobile phone brands, the average price increase of Mobile DRAM and eMMC/UFS will expand to 18-23%.