The Zhitong Finance App learned that after two years of silence, the memory chip industry is experiencing an accelerated recovery in 2024. According to media reports, the wholesale price of the indicator product DDR4 8Gb rose 9% month-on-month in January, and the price of 4Gb products rose 8% month-on-month due to Chinese customers accepting price increases from memory chip manufacturers. Furthermore, the three major original memory chip manufacturers, Samsung Electronics, SK Hynix, and Micron Technology, all control supply, and have a firm stance on price increases. Industry insiders also pointed out that price increases in the storage market in the first quarter of 2024 have become a trend, and the superposition of scenarios such as smart cars and big AI models that continue to emerge will also spawn more storage demand. Related targets: Shanghai Fudan (01385), SMIC (00981), Huahong Semiconductor (01347).

In 2023, under the downward pressure of the industry cycle, demand in the terminal market continued to weaken, and demand in the storage market represented by smartphones, PCs, servers, etc. continued to shrink, leading to a sharp drop in memory shipments and prices. According to the Gartner report, the size of the global memory market fell by 37% in 2023, making it the segment with the biggest decline in the semiconductor market. The domestic and foreign storage industry is under tremendous operating pressure, and leading companies such as Samsung Storage, Hynix, and Micron have all experienced significant losses.

However, since the fourth quarter of 2023, the memory market has recovered, demand in mobile phones and other fields has recovered, and many A-share storage vendors have shown a clear inflection point in their performance. Taking Baiwei Storage as an example, the company expects to achieve revenue of 1.4 billion yuan to 1.6 billion yuan in Q4 in 2023, an increase of more than 80% over the previous year and an increase of more than 50% month-on-month; gross margin rebounded by more than 13 percentage points month-on-month.

Judging from the performance of listed companies, recently, domestic storage vendors such as Jiang Bolong, Baiwei Storage, and GigaYi Innovation have announced their 2023 annual performance forecasts. Despite the decline in performance, an upward trend has surfaced since the fourth quarter of last year, and is expected to continue this year.

People involved in Baiwei Storage are optimistic about the increase in demand brought about by AI superimposed on smartphones, PCs, smart wearables, etc., which will further promote storage technology upgrades and capacity increases. Furthermore, with the development of integrated storage-computing technology, the deep binding of computing power and memory capacity will also drive the development of AI servers.

Jiang Bolong also pointed out in the 2023 annual performance forecast that starting from the end of the third quarter of 2023, measures such as cutting production and capital expenses taken by the original international storage factory have had obvious results. At the same time, due to falling unit costs, stimulating demand for more terminals, especially the gradual recovery of major storage application markets such as mobile phones and personal computers, the storage industry has begun to emerge from a downward cycle, market demand has recovered, and mainstream memory prices have continued to rise.

In the fourth quarter of 2023, Jiang Bolong is expected to achieve operating income of 3.5 billion yuan to 4 billion yuan, an increase of more than 100% over the previous year and an increase of more than 20% month-on-month, turning a loss into a profit during the quarter.

Looking ahead to the future market, Zhongtai Securities recently released a research report stating that looking ahead to 2024 Q1 and the full year of 2024, it is expected that the performance of module and design companies will continue to improve as storage prices continue to rise and low-cost inventory continues to be released.

Ping An Securities pointed out that from an industry perspective, according to TrendForce forecast data, whether DRAM or NAND Flash, the average price of overall storage contracts in 2024 is expected to show a quarterly upward trend. At the same time, by observing recent month-on-month improvements in the performance of leading storage vendors represented by Samsung and SK Hynix, the storage industry is expected to enter an upward cycle in 2024.

Related concept stocks:

Fudan, Shanghai (01385): As an enterprise with a broad product line among domestic chip design companies, the company's business includes four major product lines: security and identification chips, non-volatile memory, smart meter chips, and field programmable gate arrays (FPGAs). The company provides customers with chip testing services through its holding subsidiary Hualing Co., Ltd. In 2022, the company's FPGA business achieved revenue of 781 million yuan, an increase of 82.81% over the previous year. The rapid growth of FPGA is mainly due to the continuous release of the company's billion-level FPGA products. At the same time, the company's embedded programmable PSoC products have been successfully mass-produced and applied in batches to multiple customers.

SMIC (00981): SMIC recently stated at a performance briefing that under the premise that there are no major changes in the external environment, the 2024 guideline given by the company is that the increase in sales revenue should not be lower than the average of comparable peers, with a single-digit increase over the previous year. The company plans to continue to advance the 12-inch factory and capacity construction plans announced in recent years in 2024, and the capital expenditure is expected to be roughly the same as the previous year.

Huahong Semiconductor (01347): Recently, during an investigation, Huahong Semiconductor stated that the company's goal is to achieve full production of 95,000 sheets in the first 12-inch factory by the middle of 2024. Based on the current strong demand for several platforms, the company is confident that it can achieve this goal. When the capacity utilization rate returns to 90% to 95%, the company will have the opportunity to raise the OEM price of the 8-inch and 12-inch platforms and adjust the product portfolio structure to improve the company's gross profit level.