Problems with Wuhan Xinxin production line may worsen Nor Flash shortage

Source: Content from Economic Daily , Thanks.

Since the second half of last year, the market has been focusing on the shortage of DRAM and NAND Flash. The prices of the two major mainstream memories have also increased by nearly 60% since the second half of last year.

However, this year, Apple's iPhone 8 will follow Samsung in introducing active matrix organic light-emitting diode (AMOLED) panels, and mainland brands such as Huawei, OPPO and VIVO will also follow suit. In addition, automobiles and the Internet of Things are also importing NOR chips on a large scale, causing NOR shortages to surface and expand like a snowball.

Market research firm Witsview analyzed that the function of NOR Flash applied to AMOLED panels is mainly to remember the state and compensate for the current and brightness of AMOLED. The blue light in the AMOLED panel will gradually decompose and fade away with the increase of usage time, and NOR Flash is needed to maintain the continuity of AMOLED.

Witsview estimates that the market share of AMOLED panels in smartphones will approach 30% this year, of which Apple's iPhone series will require 75 million pieces, accelerating the price increase of NOR Flash products this year.

To make matters worse, Wuhan Xinxin production line was polluted

Due to the impact of NAND in recent years, Nor has experienced a recession in recent years, and many manufacturers have withdrawn from this market. However, the sudden boom in the past two years has made suppliers run around and fully loaded their production capacity.

According to foreign media reports, Wuhan Xinxin, a semiconductor manufacturing plant under the Chinese semiconductor giant Tsinghua Unigroup, had a chemical pollution incident in the factory area. Although no casualties were caused, it caused pollution in the production process and led to abnormal conditions in the products. Currently, the products of Taiwan's Nor Flash manufacturer Jinghao Technology and foreign giant Cypress, which are invested in Wuhan Xinxin, are affected. The number of affected products accounts for about 10% of the overall Nor Flash market, which will also make the current supply-demand-deficient Nor Flash production capacity even tighter, and the price will continue to rise.

According to reports, in this chemical pollution incident caused by Wuhan Xinxin, the Nor Flash products that were most affected were those of Cypress, while those of Jinhao Technology were relatively less affected. It is estimated that the total number of products affected is about 9K (equivalent to 12 inches). According to research data previously presented by DRAMeXchange, the memory storage division of market research unit TrendForce, the current global monthly Nor Flash production capacity is about 88K (equivalent to 12 inches). Therefore, the Nor Flash products affected this time account for about 10% of the global monthly Nor Flash production capacity. For this batch of affected products, Wuhan Xinxin has not only evaluated the possibility of downgrading the products, but also the possibility that the entire batch will be scrapped in the future if they cannot be downgraded.

In response to the shortage, Winbond expands production

Jiao Youjun, chairman of Winbond Electronics, the world's largest supplier of NOR Flash, said yesterday (13) that the strong demand for NOR Flash has overwhelmed production capacity, and there are still many customers queuing up. Winbond Electronics is gradually increasing its production capacity and hopes that the shortage problem will be alleviated after the middle of next year.

Jiao Youjun said that Winbond's NOR Flash business had a global market share of 35% last year, with 200 million units shipped in a single month. Although the unit price of this component is low, it is like rice and rice. Without rice, you can't cook rice. It is an indispensable component for electronic products. Another niche DRAM business has a global market share of only 1.3%, and needs to grow with the growth of customers.

Jiao Youjun emphasized that Winbond is one of the few memory manufacturers that provides both products. Recently, the demand for both products is very strong and both are out of stock. As long as new applications emerge for NOR Flash coded storage, it will drive growth. Now the overall economy looks good and new applications are also developing, so the growth momentum is strong. As for niche DRAM, Winbond also grows synchronously because of the good growth of customers and good demand.

He pointed out that the current shortage of NOR chips has affected the shipment of many products and even affected industries such as printed circuit boards (PCBs). Winbond has limited production capacity and originally expected to maintain a moderate growth of 5% per year, but now it may have to plan to expand production, mainly because the recent demand for NOR and niche DRAM customers has increased significantly, and the customer shortage problem may be triggered ahead of time.

Jiao Youjun pointed out that the new production capacity is expected to be gradually increased in June. A 12-inch wafer can produce 20,000 ICs. If it is expanded by 2,000 pieces, there will be 40 million more ICs, which can meet the demand for 40 million various electronic products.

Jiao Youjun said that Winbond's current monthly production capacity is about 43,000 to 44,000 pieces, which is expected to increase to 48,000 pieces by the end of the year. It is hoped that it will increase to 52,000 to 53,000 pieces after the middle of next year. However, it is estimated that when it reaches 55,000 pieces, the Central Science Park plant will be fully loaded.

He said that the newly added production capacity will be used to produce NOR Flash and some NAND Flash. He hopes that the output of Flash will be similar to that of DRAM in the future. It is estimated that the shortage of NOR Flash will be alleviated by the middle of next year.

Cypress withdraws, and the shortage will be more serious next year

In May this year, Cypress, the world's second largest NOR Flash manufacturer after Micron, also announced at an earnings conference that it would withdraw from the low- and medium-capacity NOR Flash market and focus on the high-capacity automotive and industrial fields. In addition, all of Apple's new mobile phones next year will use organic light-emitting diode (OLED) panels and will be equipped with NOR chips to maintain the color saturation of the mobile phones. The gap will continue to widen next year.

Storage industry insiders revealed that the fading out of NOR Flash by two major American manufacturers has left this year's NOR chip shortage unsolved. Originally, they hoped that mainland China would be able to connect with the supply, but because silicon wafer factories give priority to supplying logic chip factories, DRAM and 3D NAND Flash factories, the increase in production has been hindered, and next year will be hit by the largest shortage in history. Taiwanese manufacturers Macronix and Winbond have almost become the locked-in supply sources for global system manufacturers, and will also be the main beneficiaries of the shortage in the next two years.

Micron considered concentrating its resources on increasing the production of 3D NAND Flash. It decided to withdraw from the NOR Flash market in the second half of last year, retaining only some high-capacity NOR chips and notifying container users to respond in advance. As a result, many system manufacturers turned to Taiwan for procurement, and quotations stopped falling and rebounded last quarter after falling for four consecutive years.

Coincidentally, another major NOR chip manufacturer, Cypress, also confirmed at its earnings conference last week that it would withdraw from the low- and medium-capacity NOR Flash market and shift its strategy to focus on the automotive and industrial specification markets.

Since Cypress was still the world's largest NOR Flash supplier last year, it closed some factories after acquiring NOR Flash giant Spansion, and most of its NOR chips were used for embedded multi-chip package (eMCP) storage and imported into cars, with limited external sales. Its global market share was surpassed by Macronix in the fourth quarter of last year, and it fell to second place. The two American giants have a global market share of more than 40%, and their fading from production will have a far-reaching impact on subsequent supply, which will affect the global NOR Flash sector.

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