According to the Zhitong Finance app, CICC released a research report stating that as of 2024, the rise in prices of DRAM and NAND continues, and the inflection point of niche storage may have appeared. Driven by the atmosphere of rising prices of bulk products, and under the background of a significant reduction in channel inventory, the niche storage such as NOR Flash also begins to prepare for price increases. Looking ahead to the whole year, with the recovery of storage factories and the launch of end-terminal innovations represented by AI mobile phones and AIPC, the dual logics of "cycle + growth" in the storage sector are expected to continue to resonate, while the third phase of major funds may further boost domestic storage, and the industry may usher in sectoral opportunities.
The main viewpoints of CICC are as follows:
Summary of the 2023 storage sector report and first quarter report of 2024
In 2023, the storage design performance was under pressure, but the quarterly chain showed a recovery trend, and the module income increased significantly year-on-year, but the profit was bleak. The storage design and module tend to recover in 24Q1. From the revenue side, the storage IC design sector achieved operating revenue of RMB 4.047 billion in the whole year of 2023, a year-on-year decrease of 0.09%. The storage module sector achieved revenue of RMB 5.868 billion, a year-on-year increase of 75.15%. From the profit side, the storage IC design sector achieved a net profit attributable to the parent of RMB 723 million in the whole year of 2023, a year-on-year decrease of 84.90%. The storage module sector achieved a net profit attributable to the parent of -1.471 billion yuan, a sharp year-on-year decrease. Compared with the downturn in revenue, the profit downturn is even more significant.
CICC stated that as of 2024, both the storage design and module sectors showed a trend of recovery in both revenue and profit in 24Q1, and showed a trend of economic improvement. In particular, the performance elasticity of storage module plants has been significantly released due to the rise in bulk prices.
The niche market may rise with the rise in bulk, and the demand for end terminals is in a weak recovery trend.
In terms of price, the rise in prices of DRAM and NAND continues, and the inflection point of niche storage may have appeared, driven by the atmosphere of rising prices of bulk products, and under the background of a significant reduction in channel inventory, the niche storage such as NOR Flash also begins to prepare for price increases. In terms of inventory, the inventory level of the OEM is gradually improving.
In terms of supply, Micron, Samsung Capital operate at low levels of capital expenditure, and Hynix invests more in HBM. By the end of this year, about 80% of the OEM's DRAM production capacity will be shifted to DDR5. As the low-generation DRAM spot low-price resources are consumed, the inventory level of the OEMs decreases, and the supply of DDR4 may fall into a shortage. In terms of demand, the weak recovery trend of intelligent terminals has been established, and the growth of traditional consumer electronics is emerging. NOR Flash has broad application prospects in the field of intelligent home appliances, and NOR may usher in new growth with the recovery of home appliances.
The high prosperity of AI demand continues, and the recovery of data centers is expected.
In 2024, HBM3E will tend to become mainstream, and HBM4 is accelerating to come. With the continuous development of AI demand, the three major storage factories are dynamic. SK Hynix, Samsung, and Micron have all stated that HBM capacity has been sold out in the past two years. With the continuous advancement of HBM3E and HBM4, the industry ecology is changing. With the new increase in capital expenditures of major global cloud computing giants and the increasing demand for high-end AI servers, data centers are expected to usher in a rebound in growth, and supporting memory interface chips may encounter opportunities for recovery and growth.
Target of attention:
Niche storage: GigaDevice Semiconductor Inc., Purui Technology Co., Ltd., Dongxin Technology Co., Ltd., etc.
Memory interface chips: Montage Technology, Giantec Semiconductor Corporation
HBM industry chain: Tongfu Microelectronics Co., Ltd., Suzhou Secote Precision Electronic Co., Ltd., Hua Hai Cheng Technology Co., Ltd., Novoray Corporation, etc.
Domestic storage OEM supporting equipment and materials: Naura Technology Group Co., Ltd., Advanced Micro-Fabrication Equipment Inc. China, Han's Laser Technology Industry Group Co., Ltd., Jiangsu Yoke Technology Co., Ltd., etc.
Risk factors: The recovery of niche storage is lower than expected, the penetration rate of end-terminal innovation applications is lower than expected, the competition between HBM/DDR5 intensifies, and the verification of the supporting industry chain of domestic storage is lower than expected.