According to the Intelligent Financial News app, Samsung will raise the prices of dynamic random access memory (DRAM) and NAND by 15-20% in the third quarter. Industry sources confirmed on June 26 that Samsung Electronics has recently notified major customers including Dell Technologies and HP(HPE) of this price hike plan. In addition, driven by the demand for large-capacity NAND in AI data centers, Samsung Electronics and SK hynix have increased the utilization rate of their NAND factories from 20-30% last year to over 70%. Northeast Securities pointed out that the prosperity of the storage chip industry has entered an upward channel, and the future of domestic manufacturers is promising. On the demand side, the Chinese storage chip market is synchronized with the global market cycle and growing faster than the global market. On the supply side, overseas manufacturers have long monopolized the market, while domestic manufacturers are gradually breaking through.

From the demand side, the storage market is seeing improved prosperity.

The global storage chip market size fluctuates in sync with the semiconductor industry, and the fluctuation range is relatively large. The Chinese storage chip market is synchronized with the global market cycle and growing faster than the global market. Since 2023 Q3, the three major original manufacturers have demonstrated their production and control benefits, downstream inventory momentum has rebounded, and mainstream product prices have been boosted. In 2023 Q4, the global DRAM industry revenue was about 17.5 billion U.S. dollars, and the NAND Flash sales were about 11.5 billion U.S. dollars, both achieving double-digit growth on a year-on-year and quarter-on-quarter basis.

On the supply side, overseas manufacturers have long monopolized the market, while domestic manufacturers are gradually breaking through.

Foreign storage chip manufacturers, relying on their first-mover advantage and brand advantages in the terminal market, occupy the majority of the market shares. China's storage chip industry started later, and domestic storage chip manufacturers are in the early stages of production, with weaker technical foundations. In recent years, domestic manufacturers have worked hard to catch up, achieved breakthroughs in some areas, and gradually narrowed the gap with foreign original manufacturers. In the global SSD module OEM channel market in 2022, Kingston, ADATA, and Jintaike were the top three shippers, with a combined market share of 46%. In 2020, the top five global eMMC manufacturers were all overseas manufacturers, accounting for a total market share of 96%. China's storage module market has ample space for development, and domestic manufacturers of storage modules continue to push forward the process of independent and controllable development, with broad growth prospects in the future.

With the combined impact of price increases and supply and demand improvements, the performance of storage original manufacturers in Q1 2024 was impressive.

Benefiting from the strong growth of AI demand, server eSSD, DDR5, and HBM demand are strong, and the supply and demand of server storage chips are tight. At the same time, original manufacturers such as Samsung, SK hynix and Micron are actively transforming into or increasing production of high-profit HBM, continuously squeezing the production capacity of traditional storage chips, and accelerating the balance of the storage industry chain. According to CFM data, the global storage market size in Q1 2024 reached US$33.9 billion, a year-on-year increase of 86% and a quarter-on-quarter increase of 15%. Driven by the price increases and supply and demand improvements, the storage revenue of original manufacturers in Q1 2024 rebounded both year-on-year and quarter-on-quarter; in terms of profitability, after only SK hynix achieved profit-to-loss reversal in Q4 2023, the other four original manufacturers (Samsung, Micron, Western Digital, and Kioxia) were all in a loss state, but all five major original manufacturers achieved profit-to-loss reversal in Q1 2024.

On the NAND side, CFM data shows that the global NAND market size in Q1 2024 reached US$15.2 billion, a year-on-year increase of 74% and a quarter-on-quarter increase of 24%. The NAND average price rose significantly by 20% to 30% in Q1 2024, with Samsung, SK hynix, and Micron having roughly 30% QoQ increases in prices.

On the DRAM side, CFM data shows that the global DRAM market size in Q1 2024 reached US$18.8 billion, a year-on-year increase of 97% and a quarter-on-quarter increase of 9%. Benefiting from the overall recovery of DRAM prices and the growth in shipments of products such as HBM and DDR5, original manufacturers achieved continuous growth in DRAM revenue; among them, SK hynix and Samsung had a roughly 20% QoQ increase in prices, and Micron's price increase rate was over 10%.

Guoyuan Securities stated that AI not only requires higher computing power, but also higher requirements for the memory system of computing power. Major mainstream storage chip manufacturers have begun to raise prices, and Q2 storage chip market prices are highly likely to continue to rise.

Hua Jin Securities believes that the China National Integrated Circuit Industry Investment Fund Co., Ltd. has officially established its third fund with a registered capital of up to CNY 344 billion. As AI application demand continues to increase, it is imperative to build "Advanced Storage Capacity", and storage chips may become a key investment target for the third period of the national Large Fund. Currently, domestic storage original manufacturers' expansion projects are proceeding in an orderly manner, and their operating rates are steadily increasing. Under the policy acceleration of the third period of the national Large Fund, equipment and material suppliers related to the storage industry chain are ushering in golden development opportunities.

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