Industry丨Different storage categories, prices change again and again?
Focus: artificial intelligence, chips and other industries
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According to a new report from market research firm Trend Force, while the NAND average selling price (ASP) is expected to rise 5% to 10% in the third quarter, it is expected to decline 3% to 8% in the fourth quarter.
Price declines are particularly significant in consumer NAND products, especially eMMC and UFS products used in high-end and flagship smartphones, where prices are expected to fall by 8% to 13% in the fourth quarter.
Against the backdrop of a global economic downturn, the average replacement cycle for smartphones has been extended to three years, and the market lacks breakthrough applications that can replace smartphones. This has led smartphone and notebook computer manufacturers to adopt a more conservative inventory management strategy, which in turn has affected the issuance of NAND orders.
The SSD and Universal Flash Storage (UFS) market for personal computers is facing sluggish sales of end products, and buyers are generally adopting more cautious purchasing strategies, further exacerbating market uncertainty.
The enterprise SSD market is expected to experience a 0% to 5% price increase, however, this increase is smaller than the initial forecast. In the fourth quarter, server OEM orders declined significantly, partly due to the delay in AI server deployment by enterprise customers.
For the eMMC and UFS markets, prices of these two products, which are mainly used in smartphones, are expected to decline by 8% to 13% in the fourth quarter.
In addition, NAND wafer prices are also facing downward pressure. Following the 3% to 8% drop in the third quarter, NAND wafer prices are expected to fall another 10% to 15% in the fourth quarter.
This trend is mainly attributed to the serious inventory backlog of module manufacturers and the price reduction strategy adopted by some suppliers to maintain market competitiveness.
If the market environment deteriorates further, the price drop may be more significant.
The forecasts highlight the downward price pressure on the overall NAND flash market, especially in the consumer-oriented segment, where significant price adjustments have become the market's expectation as the year-end shopping season approaches.
The DRAM market shows a trend of falling prices
Trend Force predicts that although the average price of general-purpose DRAM increased by 8% to 13% in the third quarter, the increase will be significantly narrowed to 0% to 5% in the fourth quarter.
Specifically for DRAM products in different application scenarios, prices of DRAM for PCs and graphics cards are expected to remain at similar levels in the fourth quarter as in the previous quarter.
The price of DRAM DDR5 for servers is expected to increase by 0% to 5% compared with the previous quarter.
However, mobile DRAM prices are expected to fall 5% to 10% in the fourth quarter due to declining demand for smartphones.
In the consumer DRAM sector, DDR5 prices are expected to drop by 0% to 5%, while DDR4 prices are expected to remain stable.
The recovery trend of the mobile phone market is not obvious and major manufacturers are changing their strategies
In the third quarter, many core manufacturers have successfully resumed full production capacity, and some suppliers have achieved a significant increase in production capacity through technological innovation and improvement, thereby promoting the enhancement of overall supply capabilities.
However, due to the continued weak market demand, this supply growth trend was in sharp contrast to demand, ultimately leading to an oversupply situation.
According to the data provided, regardless of storage product categories such as DDR, SSD, LPDDR or eMMC, their price trends showed a significant downward trend during the observation period.
At the same time, weak growth in market demand may also have led to an imbalance between supply and demand, prompting prices to gradually fall.
3D NAND memory prices have fallen as demand from the IT industry has fallen short of expectations.
In response to this situation, major flash memory manufacturers are considering adjusting their production plans, reducing investment in non-volatile memory and possibly turning to the production of high-bandwidth memory (HBM).
This shift stems from the booming demand for HBM memory in the artificial intelligence industry, which is reaching unprecedented levels.
Currently, all major 3D NAND manufacturers, including Kioxia, Micron, Samsung and SK Hynix, are evaluating the feasibility of reducing non-volatile memory production and expanding investments in additional flash memory capacity.
This move is expected to stabilize 3D NAND prices and could have a dampening effect on DRAM prices in the short to medium term.
Given the current market situation, companies such as Samsung and SK Hynix are shifting their strategic focus to the DRAM field as this area shows stronger demand.
Future market prices will show a structural differentiation trend
At the supply level, storage manufacturers have adopted a more cautious attitude in their supply strategies, demonstrating their careful consideration of the market.
At the same time, in terms of demand, due to the continued investment of cloud service providers in the field of AI hardware, the demand for high-speed, large-capacity storage products in the server field has shown a significant growth trend.
Looking ahead, TrendForce predicts that HBM's share of total DRAM revenue will continue to expand, from 8% in 2023 to 21% in 2024, and is expected to further exceed the 30% mark in 2025.
In addition, with the active adoption of new-generation HBM products by AI platforms, TrendForce expects that HBM demand in 2025 will be mainly concentrated on HBM3e generation products.
Among them, 12hi products will account for more than half, becoming the mainstream product that major competitors in the AI field will compete to deploy in the second half of the year.
Morgan Stanley recently announced a series of reduction actions, mainly based on the forecast that the demand for general-purpose DRAM will weaken due to the decline in demand for smartphones and PCs, as well as the oversupply and price decline in the high-bandwidth memory (HBM) market.
As far as the HBM market is concerned, from the demand side, the investment growth rate of many large technology companies in the field of artificial intelligence has slowed down significantly, indicating that the growth momentum of HBM demand driven by AI has weakened significantly.
From the supply side, it is expected that the supply of HBM will significantly exceed market demand next year, especially as Samsung Electronics' full entry into the HBM market will further aggravate the market's oversupply situation.
Although demand in the AI field remains relatively robust, the weakness in traditional terminal markets has put pressure on DRAM price expectations.
Initial indications are that the DRAM pricing environment will be more challenging in the fourth quarter of 2024, with a possible trend reversal in 2025.
The current market has issued a sell signal, indicating that the next round of cyclical decline will start in 2025. The DRAM market will continue to face the problem of oversupply until 2026, and inventory accumulation will further aggravate this predicament.
In addition, NAND market capacity spending is expected to remain at healthy levels in 2025.
However, given the exposure to end-market risks and the overlap of customer groups similar to the DRAM market, the cyclical fluctuations of NAND and DRAM tend to show a synchronized trend.
If there is a significant slowdown in progress in the AI field, the chain reaction will have a profound and widespread negative impact on the memory market.
Specifically, this kind of stagnation is very likely to lead to a sharp decline in demand for high-performance memory products such as HBM, DRAM and SSD, thereby disrupting and adjusting the expected growth trajectory of the memory market and existing investment patterns.
Against the backdrop of the booming AI applications, capital expenditure in the memory market is gradually shifting towards DRAM.
Capital expenditure in the DRAM sector is expected to grow nearly 20% year-on-year as manufacturers actively expand production capacity to meet growing market demand.
Ending:
In fact, competition in the storage market is fierce, and major manufacturers have to adopt price reduction strategies in order to compete for market share.
Although this price reduction strategy helps to clear inventory, it also brings certain pressure to manufacturers.
On the one hand, price cuts will reduce manufacturers' profit margins; on the other hand, manufacturers also need to face the risk of inventory losses.
However, in the current market environment, price reduction seems to be a choice that manufacturers have to make.
Some references: Semiconductor Industry Perspectives: "Storage prices change again and again", Tiantian IC: "Storage prices fell 20%", China Electronics News: "Why do memory chip prices keep rising?", Semiconductor Industry Observation: "Emerging storage, two worlds of ice and fire" "Memory chips are again looked down upon", Semiconductor Core News: "Storage product prices may be seriously differentiated in the next few months" "Memory chip shipments continue to soar in October, what is the main demand driving the market?", Shande Information: "Double 11 battle line is extended, storage prices are rolled up again, and market chaos is frequent"
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