[배진솔의 전자사전]Dolgodo is a semiconductor supercycle, what is it?

[이데일리 배진솔 기자] It is often said that the semiconductor market will be booming these days. In the industry, there are a lot of sayings such as, “It is an era of rising semiconductors for 20 years” and “This year’s semiconductor supercycle is rosy.” Every industry, such as real estate, shipbuilding, and raw materials, has an economic cycle, and reading this cycle is most important as it is used by companies to plan efficient investment strategies. Then, let’s read the flow of the semiconductor supercycle (long-term boom) through’Bae Jinsol’s Electronic Dictionary’.

(Photo = Yonhap News)

◇ “Precious semiconductor”… Supercycle once again this year

Supercycle refers to a long-term price uptrend. In the past, raw material markets such as crude oil, gas, gold, copper, wheat, and corn have doubled since the Asian financial crisis in 1998, and the word’super cycle’ was added. Since then, the word is used when the prices of industrial goods that are difficult to supply in the short term such as shipbuilding, real estate, and semiconductors rise in the long term. In other words, a large, long-term boom in an industry is called a super cycle.

What does a supercycle mean in the semiconductor industry? There are various types of semiconductors such as central processing unit (CPU), DRAM, and NAND flash, but among them, memory semiconductor DRAM, which is leading the boom in the semiconductor market, attracts the most attention. For this reason, the semiconductor supercycle refers to a market situation in which the price of DRAM for PCs and smartphones rises significantly.

The reason this cycle occurs is due to the market’s regulatory function. If orders from customers who need semiconductors are pouring, but the supply cannot be digested, semiconductors become precious and prices will increase. Conversely, if customers don’t need to order semiconductors, such as stocking up too much, the price will go down. If this situation persists, supply and demand will become just right again, and this phenomenon will turn around and create an industrial cycle.

In 2017, the semiconductor supercycle came to the global market. From September to November 2017, Korea’s semiconductor exports surpassed the record high of $9 billion for 3 consecutive months, and Samsung Electronics, a representative Korean semiconductor company, reached 35 trillion won in annual operating profit in the semiconductor division alone that year It took even the No. 1 position in the semiconductor market.

On the 8th, Samsung Electronics’ overall operating profit in 2020 was tentatively calculated at 35.9 trillion won, and this amount was only earned in the semiconductor sector in 2017. It was the same with SK Hynix. In 2017, the annual operating income exceeded 13 trillion won, recording the highest annual performance.

DDR4 8GB spot price trend (Photo = SK Hynix Newsroom)

Last December, in one month, DRAM prices surged by 24.9%… Share price’highly marching’

So what will happen to the supply and demand situation of semiconductors now? Currently, as the’non-face-to-face economy’ caused by Corona 19 has established itself as a culture, demand for data is exploding. The stock level that has been released in the market has been exhausted, demand for memory semiconductors such as smartphones, tablets, and notebooks, and the advent of the 5th generation mobile communication (5G) era, and DRAM orders are on the rise.

In line with the semiconductor price, the spot price of DRAM semiconductors as of December 31, 2020 (based on DDR4 8 gigabit) was $3.460, an increase of 24.9% in one month from $2770 on December 1st. As services that consume large amounts of data, such as video conferencing and video streaming, are expanding this year, large IT companies such as Google, Microsoft, and Amazon are expected to invest in data centers, so the current price increase is expected to prolong.

The World Semiconductor Trade Statistics Organization (WSTS) forecasts that global semiconductor sales this year will increase 8.4% from this year. In particular, the sales of the memory semiconductor industry are expected to increase by 13.3% from last year. For this reason, the stock price of Wa, which is directly benefiting from the semiconductor supercycle, seems to have surged.

“After the boom, the recession comes”

The industry says that it is a period of rapid growth in the related industry during this period, but there will be a severe adjustment period afterwards, and we should not settle down. Even in 2017, when the semiconductor boom was booming, such anxious gazes existed. “Thanks for the Memory, Time For a Pause,” said Sean Kim, an analyst at Morgan Stanley, pointing out the oversupply problem in the semiconductor market.

Memory semiconductors usually show booms and bust cycles once every 3-4 years. This year, four years after 2017, should predict the recession even if the Supercycle comes again. In particular, it is more difficult to predict the shape of the memory price decline seen from 2019 to last year.

The semiconductor industry declined for about two years and sales declined in the’first supercycle’, which took place with the PC boom from early 1990 to 1996, and the’second supercycle’, which was caused by the surge in server and data center demand from 2016 to 2018. However, based on the price peak of $8.19 in September 2018, DRAM prices fell 65% in one year until October 2019, and sales decreased by 59%.

An industry insider said, “With the spread of 5G mobile applications this year, demand for semiconductors is expected to increase rapidly, such as an increase in demand for semiconductors and the non-face-to-face situation of Corona 19.”