According to the latest report released by IC Insights for the IC industry, including the top five categories of IC product growth in 33 countries, the NAND flash market is expected to grow by 19% and DRAM by 12% in 2020. The two ranked first and third respectively. At the same time, according to a report released by DRAMXchange in December last year, the current spot prices of major memory chip products have begun to rise, and expectations for the memory market recovery have increased significantly. The performance of the three major semiconductor memory manufacturers has shown signs of recovery. Samsung Electronics (hereinafter referred to as "Samsung"), SK Hynix and Micron Technology (hereinafter referred to as "Micron") are the major manufacturers of DRAM and NAND memory chips.

Since the storage company's shipments peaked in 2018, the quarterly results of the semiconductor business of the three major companies have all declined sharply, but after the decline, the companies have adopted the more traditional three major methods (for details, see If it falls further, the three giants' boost measures will hardly offset the deterioration in performance. ")

In the summer of 2019, sales of mainstream storage companies fell rapidly. In the most recent quarter, two of the top three companies (Samsung and Micron) grew slightly compared to the previous quarter. SK Hynix's sales are still declining, but the proportion has decreased. By the end of 2019, operating profit may increase from the previous quarter.

Q3'2018 storage IC reaches its peak and 2019 encounters "Waterloo"

From 2018 to the end of 2019, the performance of major global storage companies experienced a roller coaster-like change. Samsung and SK Hynix achieved record sales in the third quarter of 2018 (July to September 2018) and Micron in the fourth quarter of 2018 (2018). However, the subsequent development was not satisfactory, and sales and operating profits fell sharply like disconnected elevators.

After hitting a record high, what's the next step? Samsung's semiconductor and memory sales decreased by 24% and 26% respectively from the previous quarter, SK Hynix's sales decreased by 13%, and Micron's sales decreased by 6%. Semiconductor memory leader Samsung was the first company to fall sharply. What should be explained here is that the start time of the first quarter of Micron's financial report is from September every year.

Operating income also declined significantly during the quarter. Samsung's semiconductor operating profit fell 43% from the previous quarter, SK Hynix's operating profit fell 32%, and Micron's operating profit fell 12%. Since the beginning of this quarter, the price of DRAM has dropped, and NAND flash memory, which has already lowered the price, has greatly eroded profits.

Let's look at the results for the next quarter. The launch dates of Samsung and SK Hynix are from January to March 2019, and the release dates of Micron are from December 2018 to February 2019. On a quarterly basis, Samsung Electronics' sales fell by 23% (semiconductor) / 26% (memory), SK Hynix fell by 32%, Micron fell by 26%, and all by 20%. Operating profit is worse. They were reduced by 47%, 69% and 46%, respectively.

As a result, Samsung's semiconductor sales fell to a peak of 60% in two quarters, and semiconductor operating profits fell sharply to 30%. SK Hynix's sales also dropped to 60% of its peak and operating profit fell by only 20%. Micron's sales fell to 70% of its peak and operating profit fell to 50%.

Sales in the latest quarter increased slightly from the previous quarter

This decline has begun to slow down in mid-2019. Looking at the latest quarterly results published by each company, you can clearly see how things have changed. For Samsung's April-June 2019 (Q2 2019) results, sales increased for the first time in three quarters. Semiconductor sales rose 11% and memory sales rose 7%. Micron's results from June to August 2019 (the fourth quarter of 2019) showed that sales increased for the first time in four quarters. Up 2%. From April to June 2019 (the second quarter of 2019), SK Hynix's sales fell by 5% month-on-month, but at a single-digit rate.

Overall, sales have risen. However, operating profit is still falling. From April 2019 to June 2019 (second quarter of 2019), Samsung's semiconductor operating profit fell 17% from the previous quarter, and SK Hynix's operating profit fell 53%. During the June to August 2019 quarter, Micron's operating profit fell 37% year-on-year.

Demand for storage products DRAM and NAND Flash picks up

The three major semiconductor memory companies have two main products. DRAM and NAND flash. Their basic trends are as follows. Historically, bit demand for DRAM and NAND flash has been increasing. The growth rate of NAND flash memory is high, while the growth rate of DRAM is low. On average, the recent trend is that NAND flash memory accounts for about 30% to 40% per year, and DRAM accounts for about 20% per year.

Historically, the average selling price (ASP) of DRAM and NAND flash has been falling. For NAND flash, the drop rate is large, while for DRAM, the drop rate is small. The price of NAND flash memory temporarily increased in 2017, but the price basically continued to fall. DRAM prices often rise and fall. From 2017 to the first half of 2018, prices continued to rise. Since the end of 2018, prices have started to fall. However, in 2019, DRAM prices started to fall and stabilized, and NAND prices increased slightly.

Moreover, from the latest quarterly financial report data, we can see that the sales and operating profit of the three major companies have increased. If this trend continues, the NAND flash business will develop in a healthier direction.

IC Insights also pointed out that by 2020, the growth of NAND flash and DRAM is expected to be stronger as 5G connectivity in mobile, data center and cloud computer servers, automotive and industrial markets increases, artificial intelligence, deep learning and virtual reality .