Shulou(Shulou.com)11/24 Report--

Recently, SK Hynix, Micron and Samsung Electronics have released financial results one after another, and found from the financial results of the three storage giants that although the memory chips DRAM and NAND performed well in the first half of the year, they are more pessimistic from the expectations for the second half of the year.

At the same time, while Intel announced its results, it officially announced that it would completely shut down the business related to Optane technology. The combination of DRAM+NAND, which was originally expected by Intel to deposit and calculate all-in-one chips, is now lonely and exiting, which is very sad.

In addition, TrendForce Group Consulting had previously reported that the decline in NAND Flash prices would widen to 8 per cent in the third quarter, while the quarter-on-quarter decline in DRAM prices widened to nearly 10 per cent from 3 per cent to 8 per cent.

Both memory chips were weak on July 28, when Samsung Electronics reported results for the second quarter of this year. In the storage sector, Samsung was the first to shift its focus to the server market with robust demand, maintaining NAND and DRAM ASP in the second quarter. However, consumer demand for PC and Mobile weakened, and Mobile demand was much lower than expected, resulting in lower-than-expected NAND Flash and DRAM Bit shipments in the second quarter.

In terms of DRAM, Samsung achieved sales of products that could not be matched by servers in any quarter in the industry, but failed to achieve year-on-year growth due to weak demand for consumer products such as PC and Mobile.

In terms of NAND, Samsung continues to expand the proportion of 512Gb and above high-density products in server SSD. However, because the mobile demand is much lower than expected, the overall bit growth is lower than expected.

Samsung said shipments of NAND, which accounts for a high proportion of consumer products, fell more significantly between DRAM and NAND. Q2 DRAM Bit shipments showed a median single-digit percentage increase, while ASP shipments remained flat; NAND Bit shipments decreased by a high single-digit percentage, while ASP shipments grew by a low single-digit percentage.

Coincidentally, this situation can also be seen in the financial report of SK Hynix. On July 27, SK Hynix reported revenue of 13.81 trillion won (74 billion yuan) and a net profit of 2.877 trillion won (14.68 billion yuan), with a net profit margin of 21%.

Although the growth rate of the company's performance has not slowed down, the author found from the SK Hynix financial report that the company's DRAM chip shipments increased by about 10% in the second quarter compared with the first quarter.

However, the price of SK Hynix DRAM products declined in the second quarter, while NAND prices and overall sales increased.

Earlier, in Meguiar's financial results, we can also see the weakness of DRAM and NAND. Micron's third-quarter revenue was $8.6 billion, up 16% from a year earlier; net profit was $2.9 billion, up 35% from a year earlier; earnings per share were $2.59, higher than analysts' expectations of $2.44.

Among them, DRAM revenue accounted for 73% of total revenue. DRAM revenue increased 15% year-on-year and 10% month-on-month; core business NAND revenue accounted for 26% of total revenue, up 26% year-on-year and 17% month-on-month.

According to the author's tracking of Meguiar, although the company's revenue of the above two products remains high, there are signs of weakness. Moreover, Micron's share price has fallen by more than 50% since the beginning of the year, one of the important reasons is that the price of its main product, DRAM, continues to decline. And DRAM is Meguiar's largest and most profitable business.

DRAM is pessimistic, NAND maintains growth from the previous article, it is not difficult to find that except Samsung, storage products still grew in the first half of the year, but even so, all three manufacturers are pessimistic about the situation in the second half of the year.

First of all, from the perspective of SK Hynix, even though the company's shipments increased in the second quarter, SK Hynix lowered its forecast for shipments in the second half of the year. The company believes that consumer electronics products, including PC and smartphones, were severely affected by inflation in the first half of the year, showing fatigue in the first half, and shipments of personal computers (PC) and smartphones in the second half will be lower than expected, and these products use memory chips.

Micron CEO Mehrotra has previously said that the global market is in a rapidly changing and uncertain environment, consumer spending on electronics will also change. And Micron also announced at the earnings conference that it would reduce chip output, reduce chip manufacturing expenses and prepare for a future price downturn in fiscal year 2023, which begins in September.

However, Micron management believes that consumer demand (falling demand, including PCs and smartphones) and inventory-related headwinds will adversely affect the industry. As a result, the company expects DRAM industry market demand growth for the whole of 22 years to be more than 10 percentage points lower than the medium-and long-term compound annual growth rate, while NAND will be 20% higher.

Samsung, for its part, expects DRAM Bit shipments of Q3 to be the same as Q2, while NAND Flash Bit shipments will grow by about 10 per cent. Among them, Samsung will flexibly manage supply according to changes in DRAM demand, avoid excessive expansion of sales, and focus on the profitability of DRAM business; in terms of NAND, it will vigorously expand the application demand for high-density storage and continue to strengthen its market leading position by actively meeting market demand based on cost competitiveness.

In addition, Samsung warned of uncertainty in server demand in the second half of the year, and weak demand could spread to enterprise storage, keeping a close eye on market demand and quickly adjusting supply.

Moreover, the more important news is that Intel announced that it would formally close its Aoteng business at the same time as the results were released.

In October 2020, Intel sold its NAND business to SK Hynix for $9 billion, including the NAND SSD business, NAND components and wafer businesses, and the Dalian NAND manufacturing plant.

From then on, Intel only has arrogant business, while Aoton technology is made up of 3D XPoint memory media, Intel memory and storage controller, Intel interconnected IP and Intel software. Among them, 3D XPoint memory media is the cornerstone of arrogant technology.

Aoteng technology is also a generation of revolutionary memory business / SSD that Intel has given high hopes before, and now it can only be lonely to withdraw from the storage market.

It is not difficult to find that now the storage market is experiencing a new round of low ebb, and this is also related to the strong cyclical nature of storage. After reaching its peak in the third quarter of last year, storage began to decline, and it has been a year since. Not only has there been no sign of relief, it may be more pessimistic in the second half of the year.

As for when it will pick up, Meguiar is not expected to see a pick-up in the storage market until the end of 2022 or early 2023 at the earliest.

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