The Zhitong Finance App learned that on April 4, Hong Kong semiconductor stocks strengthened again. As of press release, Jingyang Group (08257) rose 16.67%, Jingmen Semiconductor (02878) rose 9.62%, Hongguang Semiconductor (06908) rose 7.78%, and SMIC (00981) rose 7.25%.On the one hand,Judging by the market, after experiencing a downward trend that lasted more than half a year, storage prices are expected to bottom out in the second quarter of this year. As the economy and demand improve, the market is expected to bottom out in the third quarter. Many institutions are optimistic that the most elastic storage sector will usher in recovery in the second half of 2023.On the other hand,ChatGPT has fueled demand for computing power, and memory chips are expected to get back on the limelight. Dongxing Securities believes that hardware is expected to come first, and computing power+memory chips may directly benefit.
Recently, related companies have also released their 2022 results one after another. Among them, SMIC achieved the strongest annual performance in history, with revenue of about 49.516 billion yuan in 2022, an increase of 39% over the previous year; net profit attributable to shareholders of listed companies was about 12.133 billion yuan, an increase of 13% over the previous year. CICC said that SMIC's performance last year was in line with expectations, and the smartphone and consumer electronics industry is still in the inventory removal stage. Market demand is expected to pick up in the second half of 2023 as new products are launched one after another.
Huahong Semiconductor achieved revenue of 2,475.5 billion US dollars in 2022, an increase of 51.8% over the previous year. Gross margin was 34.1%, up 6.4 percentage points. Profit attributable to parent company owners during the year was US$449.9 million, an increase of 72.1% over the previous year. Looking back at 2022, although smartphones and consumer electronics entered the inventory removal industry cycle in the second half of the year, benefiting from the company's active expansion and rapid growth in the fields of automobiles, industrial control, data centers, and new energy power generation and new energy applications, the company maintained a capacity utilization rate of 107.4% throughout the year, driving up the average price of wafers, and its performance was impressive.
The storage sector is expected to recover in the second half of 2023
As major storage vendors successively disclose their 2023 forecasts in the latest earnings briefings and drastically cut their 2023 capital expenditure plans, many institutions are optimistic that the most elastic storage sector will usher in a recovery in the second half of 2023. Judging from the three major overseas storage giants, Micron has further cut capital expenditure in 2023. Currently, it is expected to invest about 7 billion US dollars, a reduction of more than 40% compared to 2022. According to Micron, memory chip inventories have reached a high point, and the industry is expected to reach an inflection point in the future. Although storage prices are still declining, manufacturers' inventory pressure has reached a peak, and it is expected to gradually drop to a safe level in the future
SK Hynix also revealed at the shareholders' meeting a few days ago that demand for memory chips is expected to recover in the second half of this year, but uncertainty still exists. The company's capital expenditure will be cut in half this year, and there will be no further production cuts. Meanwhile, Samsung Electronics, a leader in memory chips, is also considering cutting memory chip production.
On the price side, since most suppliers have already begun to reduce production, the vicious cycle of mutual weakening has also been controlled to a certain extent. TrendForce expects the overall month-on-month decline of NAND Flash ASP in the first quarter of 2023 to be 10-15%, less than the month-on-month decline in the fourth quarter of 2022. In terms of DRAM, TrendForce believes that compared to the nearly 20% drop in average DRAM prices in the first quarter, it is estimated that the decline in the second quarter will converge to 10-15%. However, the recovery in demand for DRAM in the second half of 2023 is still unclear.
The industry is optimistic that the storage sector will recover in the second half of 2023. Judging by the market, after experiencing a downward trend that lasted more than half a year, storage prices are expected to reach bottom in the second quarter of this year. As the economy and demand improve, the market is expected to bottom out in the third quarter.
Market research agency Jibang Consulting pointed out in its latest report that the inventory levels of memory module manufacturers have returned to normal one after another. Under the mentality of expectations that demand for products such as SSDs and memory cards will be boosted in the second half of the year, they intend to gradually expand the purchasing volume to establish low-cost inventories to avoid a subsequent price rebound and be forced to absorb the cost of price increases.
AI demand boosts the boom in the memory industry
Furthermore, ChatGPT has fueled demand for computing power, and demand for mobile devices has gradually recovered. According to OpenAI estimates, since 2012, the world's leading AI model training computing power requirements have doubled in 3-4 months, and the computing power required for head training models has increased tenfold every year. According to Sumit Sadand, chief commercial officer of Micron Technology, the amount of DRAM in a typical AI server is 8 times that of an ordinary server, and the number of NAND is 3 times that of an ordinary server.
According to Yan Shuyin, vice president of Jiang Bolong, large models such as ChatGPT will require higher storage performance (data processing rate, etc.), reliability, and energy efficiency (low power consumption). From the perspective of DRAM, high-performance computing such as AI will bring high performance and low latency product requirements to storage. The AI model allocates DRAM resources with very large capacity on the network side for training, including data analysis, etc.; on the NandFlash side, high-speed Flash products are required. Furthermore, after the entire AI application, a large amount of data will be generated, and there is a huge demand for the storage capacity of the entire Flash, including smart wearables on the end side, which will require small size and low power consumption. These are all positive requirements for storage in the future.
Zheshang Securities believes that the memory capacity of the underlying layer is just needed or is being expanded simultaneously in conjunction with AI computing power upgrades. Overall, many institutions believe that the storage industry has entered a layout period due to factors such as boosting demand for AI, combined with inventory in the storage market reaching an inflection point, and industry sentiment that is expected to bottom out.
Huajin Securities pointed out that the rapid development of ChatGPT and the successive recovery of consumer terminals are expected to gradually stabilize prices in the storage industry. According to TrendForce related data, servers and smartphones are the two main application areas for DRAM. Smartphones and servers accounted for 38.5%/34.9% respectively in 2022, with a total ratio of 73.4%. It is expected that servers will surpass smartphones to become the largest application area for DRAM in 2023.
Tianfeng Securities released a research report saying that the big pre-training model represented by GPT-4/ChatGPT may spawn future demand for AI server expansion. In the future, with the market share of ChatGPT and the development of the application side, the demand for chips such as ChatGPT will be large and highly sustainable. In advanced manufacturing and packaging, it is recommended to focus on SMIC, etc.