Flash memory prices fell 21% year-on-year, and SSDs hit a record low

Sluggish PC sales due to the impact of inflation, coupled with falling prices of core component NAND flash memory, have also caused solid-state drive (SSD) prices to decline for five consecutive quarters and hit record lows for three consecutive quarters.

Nikkei reported on the 2nd that the price of SSDs used in PCs continued to fall and reached new lows. This was mainly due to the impact of inflation, which caused consumers to restrain their spending, resulting in sluggish PC sales, and the falling price of core component NAND Flash. The wholesale price (bulk transaction price) of the SSD benchmark product TLC 256GB from October to December 2022 is about US$29.5 each, which is a 6% decrease (a decrease of US$2) compared with the previous quarter (July-September), marking the fifth consecutive It fell quarter-on-quarter and hit a record low for the third consecutive quarter; it dropped 21% (down $8) compared with the same period last year.

U.S. research company Gartner pointed out that global PC shipments dropped 19.5% from the same period last year to 67.996 million units during July-September 2022. This is the largest decline in history since the survey began in the mid-1990s. This is a significant drop for the PC market. It's a historic slowdown.

In addition to weak PC demand, the falling price of NAND Flash is also the reason why SSD prices continue to fall. SSD is equipped with several NAND Flash, so the price is easily affected by the price of NAND Flash. During the period from October to December 2022, the price of TLC 256Gb, the benchmark product of NAND Flash, was about US$2.40 each, which was 14% lower than the previous quarter (July-September). %.

The report pointed out that although the year-end peak season has entered, the market generally expects that PC sales will be weak this winter due to inflation suppressing household consumption. Although memory manufacturers have begun to reduce NAND Flash production, the effects of the production reduction are not expected until the spring of 2023. It will begin to show that the current price of NAND Flash may continue to fall, so the price of SSD may also drop further.

The Japan Electronics and Information Technology Industry Association (JEITA) issued a press release on November 29 stating that according to the latest forecast report released by WSTS, due to weak demand for smartphones and PCs, memory demand is expected to decrease significantly and logic demand will shrink. Therefore, the estimated global semiconductor sales in 2023 has been significantly revised down from the original (August) expected annual increase of 4.6% to an annual decrease of 4.1%, amounting to US$556.568 billion, which will be the first time in four years (since 2019) shrink.

WSTS predicts that memory sales will decrease by 12.6% annually in 2022 to US$134.407 billion, and memory sales will continue to shrink by 17.0% in 2023 to US$111.624 billion.

Kioxia, a major NAND Flash manufacturer, announced on September 30 that its Yokkaichi Factory (Yokaichi City, Mie Prefecture) and Kitakami Factory (Kitagami, Iwate Prefecture) that produce NAND Flash will adjust their production and reduce production starting from October 2022. 30% (the amount of wafer input is reduced by about 30%).

WSTS forecasts cut growth forecasts as inflation rises and demand weakens in end markets, particularly those affected by consumer spending. Although some major categories are still expected to achieve double-digit year-over-year growth in 2022, with analog technology growing by 20.8%, sensors growing by 16.3%, and logic growing by 14.5%. Memory is expected to turn negative in the forecast, declining 12.6% year over year.

By 2022, all geographic regions except Asia Pacific will show double-digit growth. Asia Pacific, the largest region, is expected to decline 2.0%. The Americas region is expected to grow by 17.0%, Europe by 12.6%, and Japan by 10.0%.

By 2023, the global semiconductor market is expected to decline by 4.1% to US$557 billion, driven by the memory sector. In the latest forecast, the category is expected to fall to $112 billion by 2023, down 17% from the previous year. Some other major categories showed single-digit growth, such as optoelectronics, sensors, discrete and analog.

All regions are expected to be flat in 2023, with only Asia Pacific expected to decline 7.5% year-on-year.

According to WSTS, the semiconductor market fell by 6.3% in the third quarter of 2022 compared with the second quarter of 2022. Based on the outlook for the fourth quarter of 2022, the second half of 2022 will be more than 10% lower than the first half of 2022. It can be seen that the decline in the second half of 2022 will be the largest half-year decline since the 21% decline in the first half of 2009.

Revenue changes for top semiconductor companies were mixed between Q3 2022 and Q2 2022. Nine of the 15 companies reported (or guided) revenue growth in the third quarter of 2022, with Infineon the highest at 15% and STMicroelectronics at 13%. Six of the companies reported revenue declines, with storage companies Samsung, SK Hynix and Micron Technology seeing the largest declines, down 19% to 23%. The decline in memory revenue in the third quarter of 2022 caused SK Hynix's ranking to drop from 3rd to 5th place, and Micron Technology dropped from 5th to 6th place. Samsung managed to maintain its number one ranking against Intel. Qualcomm rose to 3rd place, and Broadcom became 4th.

The revenue outlook for Q4 2022 is generally bleak, especially for memory. Micron Technology's guidance is for the fourth quarter of 2022 to be down 36% from the third quarter of 2022. Micron plans to reduce its wafer operations by about 20%. Kioxia plans to reduce its wafer starts by about 30%. Samsung and SK Hynix did not give specific revenue guidance, but both cited weak demand and inventory adjustments as factors affecting revenue in the current quarter. Among non-memory companies, Qualcomm, Texas Instruments and MediaTek all expect double-digit revenue declines in the fourth quarter of 2022. Most companies blame weak overall demand and customer inventory adjustments on the bleak outlook.

Cars seem to be the only healthy part. Texas Instruments, STMicroelectronics, Infineon and NXP all said growth in the automotive industry had largely or partially offset declines in other industries. Of the ten companies providing guidance for the fourth quarter of 2022, only Nvidia (+1.2%) and STMicroelectronics (+1.8%) expect revenue to increase. The weighted average revenue change for the nine non-memory companies providing guidance is a 9% decline in Q4 2022 from Q3 2022.

Weakness in key end markets such as PCs and smartphones is evident from IDC's forecast for shipments in the third quarter of 2022. PC sales were down 15% from a year ago, and smartphone sales were down 9.7%. Before third-quarter 2022 data becomes available, IDC expects PC shipments to decline 12.8% and smartphone shipments to decline 6.5% in 2022.

Based on the latest shipment data, we at Semiconductor Intelligence now predict that PC shipments will decline by 15% and smartphone shipments by 10% in 2022.

Given the 6.3% semiconductor market decline in Q3 2022 and the bleak outlook for Q4 2022, only forecasts made after the release of WSTS data for Q3 2022 are relevant. The Cowan LRA model forecast for November 2022 is 8.1%, IC Insights is 3%, and our Semiconductor Intelligence is 1.5%.

The semiconductor market will definitely decline in 2023. IC Insights expects a 6% decline, and we at Semiconductor Intelligence expect a 14% decline. Interestingly, back in August, Future Horizons predicted a 22% decline in 2023. The WSTS committee met last week to discuss its fall forecast, which should be released within the next two weeks. It will be interesting to see how much it changes from WSTS's August update forecasts of 13.9% growth in 2023 and 4.6% growth in 2023.

Our Semiconductor Intelligence predicts a 14% decline in 2023, which would be the largest decline in the semiconductor market since a 32% decline in 2001, 21 years ago. Over the past 50 years, the market has experienced double-digit declines in only three years: 1975, 1985 and 2001. Our forecast for 2023 is based on the following assumptions:

• No global recession in 2022 or 2023

• Inventory corrections will resolve over the next two to three quarters

• – PCs and smartphones to return to pre-pandemic trends by mid-2023

If any of the above assumptions fail to materialize, the semiconductor downturn could continue through the entire quarter of 2023 and result in an annual decline.