DRAM improvement and NAND stagnation expected
[테크월드=김경한 기자] Semiconductor earnings are expected to improve as the DRAM industry improves. Relatively, NAND flash is unlikely to secure profitability due to intensifying competition.
According to IBK Investment & Securities, the DRAM market is expected to be in short supply this year. The supply shortage caused by the contraction of investment last year has been pointed out as the main cause, and demand is highly likely to fluctuate according to the variable called Corona 19.
In the second quarter of last year, the supply of DRAM briefly turned negative, but after switching back to positive in the third quarter of last year, it rose until the fourth quarter. It is expected to switch back to negative from the first quarter of this year and turn to positive in the fourth quarter of this year.
The DRAM application is differentiated by maker. Samsung Electronics has the highest proportion of mobiles, SK Hynix has the highest proportion of servers, and Micron has the highest proportion of PCs. There are some changes, but the absolute share of demand is data processing and mobile. Servers account for over 60% of data processing. Server sales rose from negative growth in 2019 and then entered a growth trend again from last year. This year is expected to increase by 15.3% compared to last year.
Cloud and data center CAPEX (expenses spent to generate future profits) are dominated by Google, Microsoft (MS), and Amazon, and continue to increase every year. This year’s CAPEX is expected to increase by 20% compared to last year.
There are many predictions that the DRAM semiconductor market will enter the super cycle this year. The super cycle means that the DRAM ASP (average selling price) increases for two consecutive years. The DRAM industry’s super cycle has occurred twice in the past. This is when the PC boom occurred in 1994-1995, and when the advent of AlphaGo in 2017-2018 led to a surge in cloud and server demand.
The World Semiconductor Trade Statistics Organization (WSTS) predicts that the global semiconductor market will increase by 8.4% this year. This is because double-digit growth is expected for memory semiconductors and optoelectronics (image sensors). Through this, the semiconductor market is expected to achieve sales of 469.4 billion dollars this year. In particular, the rise of memory semiconductors is clear, and this year, memory semiconductors are expected to record sales of $135.3 billion, up 13.3%.
The basis for this is the decrease in supply and the growth of the non-face-to-face industry following the Corona 19 crisis. As mentioned above, last year there was a decline in investment in DRAM. In addition, the inventory of major DRAM companies has plunged, and server CAPEX is expected to increase by 21.7% this year, and the demand for DRAM in the server market is active. Kiwoom Securities said that DDR5 is expected to account for 90% of the entire DRAM market in the first half of 2023 as DDR5 will be expanded to PCs and servers from this year. In recent years, the non-face-to-face market is revitalizing due to the Corona 19 incident, and demand for notebooks and PCs is expected to increase as high-performance hardware releases, such as Intel’s announcement of 11th generation core processors, are followed.
In addition, from the end of last year, DRAM suppliers are expected to resume converting the DRAM process to the CIS process. This is because the decline in smartphone sales due to Corona 19 adversely affected the demand in the CIS market last year, but this year’s increase in demand for 5G smartphones and high-pixel cameras will stimulate CIS demand, which has been stagnating. Accordingly, Kiwoom Securities analyzed that CIS suppliers would convert their DRAM equipment to CIS to respond to demand, and in this process, the wafer input production capacity of DRAM is expected to decrease.
Considering this trend, the shortage of DRAM supply will be evident, but a super cycle in the DRAM field is expected due to increased demand for servers and mobiles.
Unlike DRAM, NAND flash is expected to continue until the third quarter of this year as NAND supply has entered an oversupply phase from the second half of last year. Supply has been increasing rapidly since last year, and supply is expected to exceed market demand this year.
This year’s NAND CAPEX is expected to increase by 4.9% compared to last year. While Samsung Electronics is aggressive with NAND, the rest of the companies are approaching the market conservatively. Samsung Electronics’ CAPEX is estimated to be the highest at 18.6%. Kioxia and SK Hynix are expected to see a decrease in investment compared to last year, but as SK Hynix announced in October last year that it will take over the Intel NAND flash memory business, it is highly likely to act as a variable.
IBK Investment & Securities predicts that this year’s NAND flash’s bit growth will be 39.5%. The outlook for major NAND flash makers is predicted to be in the early 30% level, and mobile, which has a high proportion, is flexible depending on the scale, but is expected to increase 39.3% compared to last year. With the launch of new game consoles, consumers are expected to increase 66.9%, and the cloud and eSSD markets are expected to increase only 10.5%.
Reporter Kim Kyung-han [email protected]
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