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2023/01/05
TrendForce’s latest analysis of the NAND Flash market finds that most suppliers have already started to scale back production Due to this development, the vicious cycle of suppliers undercutting each other has been brought under control to some degree as well Therefore, the QoQ decline in the overall NAND Flash ASP for 1Q23 is currently projected to reach 10~15%, which is smaller than the QoQ decline for 4Q22 Regarding price trends of different NAND Flash products in 1Q23, prices of NAND Flash wafers are already at the cash cost level, so their decline will moderate sooner compared with other kinds of NAND Flash products Conversely, prices of enterprise SSDs will suffer the sharpest drop compared with other kinds of NAND Flash products because they represent a major source of inventory consumption and offer a relatively high profit margin
NAND Flash suppliers have been aggressively cutting production because the whole NAND Flash market witnessed a price collapse during 2H22 Also, compared with DRAM, NAND Flash has more price elasticity of demand Therefore, price slump will end sooner for NAND Flash than for DRAM
With regard to the client SSD segment, brands for notebook (laptop) computers have been passive in stocking up on SSDs because the demand for their devices is expected to remain fairly weak through 2023 Furthermore, the growth of the demand bits related to client SSDs will decelerate further moving into 2023, so the effect of suppliers’ production cuts on this segment is not expected to become immediately noticeable Therefore, supply will continue to outstrip demand for client SSDs In the aspect of product development, the mainstream products in the client SSD segment during 2023 are still going to be 512GB in capacity and based on the 176L 3D NAND technology Turning to cell architecture, QLC products have undergone some improvements in performance However, this also has the effect of exacerbating the decline in prices of 512GB SSDs Going forward, prices of client SSDs on the whole will keep falling as more suppliers offer higher-layer QLC products On the other hand, TrendForce has observed that some suppliers that have initiated production cuts are able to hold firm on prices of client SSDs Hence, the QoQ decline in prices of client SSDs will shrink to around 10~15% for 1Q23
In the enterprise SSD segment, buyers have repeatedly corrected down their orders since 4Q22 because server shipments have been sliding Furthermore, the built-out of data centers in China slowed down noticeably in 2022 due to the interferences caused by local COVID-19 outbreaks and government policies As a result, China’s demand for enterprise SSDs in 2022 was weaker compared with 2021 To alleviate the problem of excess inventory, suppliers made larger price concessions for 4Q22 enterprise SSD contracts in exchange for larger procurement quantities from North American buyers However, this move has taken away a portion of the demand that is reserved for 1Q23 Since the ASP of enterprise SSDs is still higher than the ASPs of various consumer NAND Flash products, suppliers still want to ramp up shipments of the former in order to maintain profitability There is a now fierce price competition in the enterprise SSD market as suppliers seek to capture more market share As a result, enterprise SSDs will also suffer the steepest price drop among NAND Flash products for 1Q23, with the QoQ decline coming to around 13~18%
Looking at the eMMC segment, the main sources of demand there are Chromebooks, TVs and networking devices Presently, these applications are not providing sufficient growth momentum to prop up eMMC prices In view of the persistently high inventory level for this kind of storage product, NAND Flash suppliers are willing to slash prices as long as there is still some room for profit TrendForce also points out that some module houses are undercutting eMMC prices in China with products made from low-priced wafers This kind of competition is exerting a certain amount of pressure on NAND Flash suppliers as well On the other hand, prices of low-capacity eMMC solutions are near the cost level, so there is not much room for further drops Going forward, the downward price pressure will concentrate on solutions that are 64GB or higher in capacity TrendForce projects that eMMC prices on the whole will drop by 10~15% QoQ for 1Q23
Turning to the UFS segment, the demand for smartphones is still in a slump, so most smartphone brands intend to keep their procurements of UFS solutions for the whole 2023 around the same amount as for 2022 Thus, the demand outlook of this segment for 2023 is lackluster Looking ahead, NAND Flash suppliers will continue to vigorously promote UFS solutions since the steady increase in the average NAND Flash content of smartphones has contributed significantly to the bit consumption of the entire NAND Flash market In particular, suppliers hope that there is sufficient price incentive to encourage Chinese smartphone brands to upgrade the storage capacity of their devices TrendForce has observed that the number of smartphone models featuring a 256GB storage capacity has risen, but these mostly belong to the high-end and flagship segments This trend will probably become more noticeable later on as smartphone brands launch new devices for 2H23 In general, the UFS segment will remain in oversupply during 1H23 TrendForce projects that prices of UFS solutions will drop by 10~15% QoQ for 1Q23
Lastly, in the NAND Flash wafer segment, module houses presently exhibit weak procurement momentum At the same time, sales have been depressed for retail SSDs and memory cards The effect of suppliers’ production cuts is expected to become more apparent in 1Q23, but strong inventory pressure is going to keep wafer prices low in the short term On the other hand, prices are now at the cash cost level for wafers that are mainstream in density NAND Flash suppliers are also selling at a loss for some large wafer transactions Going forward, suppliers will be more reluctant to accept deals that entail a loss as the overall supply-demand dynamics gradually returns to a balance TrendForce projects that contract prices of NAND Flash wafers will drop by about 3~8% QoQ for 1Q23 Compared with other categories of NAND Flash products, wafers will experience the smallest decline in 1Q23
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/12/05
TrendForce reports that the recent easing of tight supply for components has led to rising shipments for enterprise servers Furthermore, ODMs for the most part have been able to sustain the momentum of data center build-out with the demand from ByteDance and the tenders issued by Chinese telecom companies Nevertheless, the performance of the enterprise SSD market on the whole has been impacted by falling NAND Flash prices For 3Q22, the NAND Flash industry’s enterprise SSD revenue dropped by 287% QoQ to US$522 billion Furthermore, all enterprise SSD suppliers recorded a negative performance for the period as well
Regarding individual enterprise SSD suppliers’ revenue figures for 3Q22, Samsung posted around US$212 billion Its market share also shrank to 406% from 445% in 2Q22 Samsung’s performance was mainly dragged down by the decline in its NAND Flash ASP In the aspect of product development, SSDs featuring 128L NAND Flash and PCIe 40 will remain Samsung’s main offerings for enterprise storage during 2023
Going forward, Samsung and its competitors could use the opportunities provided by the diversification of server CPUs to raise SSD shipments Presently AMD is expanding its market share for server CPUs thanks to the widening adoption of its solutions among CSPs and ODMs At the same time, CSPs are starting to develop their own CPUs Also, penetration rate is climbing for server CPUs based on the ARM architecture, and new CPUs will support higher data transfer rates for storage solutions Another noteworthy development is the Open Compute Project (OCP) The portion of enterprise SSDs that conform to the specifications set under OCP is expected to grow in the future All in all, there are new sources of demand that Samsung can tap into However, the competition in the enterprise SSD market will intensify as well, so Samsung will face difficulties in keeping its market share at almost 50%
SK Group (encompassing SK hynix and Solidigm) saw its enterprise SSD revenue dropped to about US$121 billion for 3Q22 SK Group is in the process of acquiring Intel’s NAND Flash and SSD business, and the resulting benefits will become much more apparent next year Solidigm will start mass producing PCIe 50 SSDs that support OCP specifications in 2023 This will create opportunities for greater cooperation between SK Group and some North American CSPs Also, samples of PCIe OCP products are now being qualified by server OEMs, so the demand for them is expected to keep rising In addition to these developments, TrendForce’s latest investigation finds that SK Group is close to completing its plan for developing a comprehensive line-up of enterprise SSDs and establishing market positions for these products With a full range of flexibly priced TLC, QLC, and PLC offerings, SK Group should be able to raise its market share for enterprise SSDs in the future
Western Digital (WDC) posted US$673 million in enterprise SSD revenue for 3Q22 Even though WDC only began focusing on enterprise SSDs last year and has yet to finish customer sampling for its PCIe 40 products, TrendForce has observed that the supplier has expanded its partnerships with North American clients and formulated a proactive pricing strategy Therefore, it has a good chance to surpass most of its competitors in revenue for 4Q22 On the other hand, an examination of its client base reveals that WDC apparently has no substantial follow-up plan for the development of products featuring the SAS interface Furthermore, the revenue performance of its PCIe 30 products in 2023 is not expected to be as decent as it has been this year because customers will be making upgrades in order to obtain a higher data transfer rate Therefore, WDC has to quickly get more clients to qualify its PCIe 40 products so that it can effectively retain its market share for enterprise SSDs
Micron’s enterprise SSD revenue slid to around US$6562 million for 3Q22 due to a marginal downward correction to server OEMs’ demand Regarding product development, Micron already launched 176L PCIe 40 enterprise SSDs early on, but customer sampling took longer than initially anticipated for these products Thus, the supplier is also progressing slower than originally expected in ramping up shipments of PCIe enterprise SSDs as a whole, and SATA currently remains as the mainstay in supplier’s offerings TrendForce believes raising shipments of PCIe 40 products will be one of Micron’s priorities for next year With market growth gradually slowing down for SATA products, Micron will be more constrained in its attempt to significantly increase enterprise SSD revenue
Kioxia began stepping up shipments of its PCIe 40 products in 3Q22 Meanwhile, demand was holding steady for its SAS products Hence, the supplier’s enterprise SSD revenue came to about US$559 million Looking ahead, Kioxia will commence mass production for PCIe 50 SSDs near the end of this year Moreover, the supplier has made sure that the specifications of its PCIe products support OCP As for 2023, Kioxia has a chance to raise its enterprise SSD revenue over the quarters as more clients qualify its PCIe products TrendForce also believes Kioxia will be able to grow its market share due to having a comprehensive range of offerings that encompass SATA, PCIe, and SAS However, Kioxia has to further improve the flexibility of its supply chain Resolving this urgent issue will determine whether the supplier can maintain stability in meeting clients’ demand
Moving into 4Q22, economic headwinds have compelled companies across most sectors to scale back equipment-related expenditure Meanwhile, server OEMs have taken steps to rein in the rising inventory, so the momentum of their procurement activities have slowed down noticeably Looking specifically at China, a turnaround in its demand situation is not expected to occur in the near future as there will not be another wave of server-related tenders coming forth With supply glut rapidly worsening across the whole NAND Flash market, the overall average contract price (or the ASP) of enterprise SSDs is projected to fall by more than 20% QoQ for 4Q22 This, in turn, will also lead to a QoQ decline of more than 20% in enterprise SSD revenue
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/11/23
Market intelligence firm TrendForce reports that the whole NAND Flash market was severely weakened by plummeting demand in 3Q22 Because shipments of end products including consumer electronics and servers had been below expectations, the overall NAND ASP fell by 183% QoQ Furthermore, the general economic outlook remained pessimistic, so enterprises across many sectors started to scale back their capital expenditure plans and halted the momentum of their procurement activities Due to this development, the problem of excess inventory eventually spread to NAND Flash suppliers The pressure on suppliers to make sales was ratcheted up dramatically According to TrendForce’s investigation, NAND Flash bit shipments fell by 67% QoQ for 3Q22, and the overall NAND Flash ASP also kept sliding On account of the unfavorable market situation, the NAND Flash industry recorded a total revenue of around US$1371 billion for 3Q22 The QoQ revenue decline reached as much as 243%
The ranking of NAND Flash suppliers by revenue saw two notable changes for 3Q22 First, SK Group moved down to third place as it suffered the largest revenue drop among suppliers Its revenue slipped by 298% QoQ to US$254 billion mainly due to the significant deterioration of the demand for PCs and smartphones Its subsidiary Solidigm was also affected by the slowdown in server procurements Previously, servers had a fairly stable demand situation compared with other kinds of end products However, server demand eventually buckled in 3Q22 as result of enterprises cutting capital expenditure and undergoing a period of inventory correction Compared with 2Q22, SK Group (that encompasses SK hynix and Solidigm) posted a drop of 111% in bit shipments and an even steeper decline of more than 20% in ASP
The other notable change in the 3Q22 ranking was Kioxia The supplier returned to second place in terms of revenue and market share because it was able to make a gradual recovery from the material contamination incident that had happened earlier this year Even though Kioxia did suffer a significant decline in its ASP due to the slumping demand for consumer electronics, its bit shipments were bolstered by the seasonal stock-up activities of its clients in the smartphone industry and rose by 235% QoQ Taken altogether, Kioxia’s revenue dipped by just 01% QoQ to US$283 billion
Owing to Downturn in Both Quantity and Price, Micron Posted Largest Drop in NAND Flash Bit Shipments with QoQ Decline Reaching 21%
Other NAND Flash suppliers including Samsung, Western Digital and Micron all posted a considerable QoQ decline in revenue for 3Q22 because of a drop in both price and shipment quantity Again, weakening demand for end products was one of the major reasons behind these suppliers’ poor performances Regarding Samsung, the supplier saw a drop in its enterprise SSD shipments during 3Q22 as server demand slowed down This was a sharp negative turn compared with the situation in 2Q22, when orders related to data centers were propping up enterprise SSD procurements Samsung’s revenue fell by 281% QoQ to US$43 billion for 3Q22
Western Digital’s NAND Flash business were under enormous pressure in 3Q22 as it recorded a QoQ decline in bit shipments and a sharp drop in its ASP All in all, Western Digital’s revenue fell by 283% QoQ to US$172 billion Turning to Micron, an analysis of its memory revenue performance, which encompasses both DRAM and NAND Flash, has revealed that the only the application segment that did well in 3Q22 was automotive memory solutions Micron actually posted a new high for its revenue from automotive memory solutions in that quarter Conversely, its revenue figures related to other memory-related applications, including NAND Flash solutions for data centers, industrial IoT, etc, all exhibited a QoQ drop And because of the poor results for the rest of application segments, Micron’s NAND Flash revenue as a whole registered a steep QoQ decline of 262% to US$169 billion
NAND Revenue Will Show a QoQ Drop Again for 4Q22 as Inventory Pressure Continues to Mount and Production Cuts Bring No Immediate Relief
Moving into 4Q22, TrendForce believes that with the notable exception of Samsung, most suppliers will be more cautious in planning output following their respective earnings calls for the third quarter To restore balance to supply-demand dynamics as quickly as possible, suppliers will be taking measures such as cutting wafer input and decelerating the pace of technology migration However, the usual demand surge in connection with the year-end holiday sales has failed to materialize this year, and NAND Flash buyers’ passiveness is causing inventory to further accumulate on the supply side As for production cuts, their effect on the market will not be apparent for at least a quarter Hence, prices of NAND Flash products will still be under significant downward pressure in 4Q22, and TrendForce has widened the projected QoQ decline in contract prices to 20~25% in its latest forecast With high inventory and falling prices serving as constraining factors, the NAND Flash industry is also forecasted to post a QoQ decline of almost 20% in its total revenue for 4Q22
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/11/22
Based on the latest data and research, TrendForce has further corrected down the projected YoY growth rate of whole server shipments for 2023 to 28% Three factors are behind this revision First, lead time has started to return to its usual length for most orders related to server components from 3Q23 onward Seeing this, server OEMs and cloud service providers (CSPs) have also begun to correct the component mismatch issue by lowering demand for items that are in excess while maintaining a constant inventory level for items that are still in tight supply This development, in turn, has reduced the flow of server orders going to ODMs Second, the wave of demand that was generated earlier from the effects of the COVID-19 pandemic is dissipating Hence, expansion activities have cooled off noticeably for services such as video streaming, e-commerce, etc Among CSPs, Meta, Google, and ByteDance (TikTok) have lowered their server procurement quantities for next year Lastly, the global economic outlook has remained fairly negative, so companies across most industry sectors have formulated a more conservative expenditure plan and scaled back IT-related spending for next year
QoQ Declines in Prices of Server DRAM Modules and Enterprise SSDs for 4Q22 Have Widened to 23~28% as Competition Among Suppliers Intensifies
In the server DRAM market, DRAM suppliers are facing greater difficulties in raising sales because buyers have been carrying a high level of inventory during the second half of this year In 3Q22, suppliers did manage to get some buyers to lock in the price for that quarter and the next However, TrendForce believes that further downward corrections to next year’s server shipments have ratcheted up the price competition among suppliers Moving into October, CSPs received even lower server DRAM quotes as suppliers proposed to lock in the price to the end of 1H23 Now, in November, another round of negotiations for “fourth-quarter special deals” has also commenced Due to these developments, QoQ declines in contract prices of server DRAM modules for 4Q22 have enlarged to 23~28%
Regarding the enterprise SSD market, orders remained relatively stable for a while However, the increasingly conservative economic outlook and the downward revisions to corporate capital expenditure plans in 2H22 have led to softer demand momentum for enterprise SSDs Moreover, NAND Flash suppliers face rising inventory for enterprise SSDs as the demand for consumer electronics has plummeted Internally, they have been under pressure to find solutions for consuming excess production capacity and meeting their year-end targets Externally, they need to prepare for headwinds such the expected weak demand situation during the low season of 1Q23 and delays in the production ramp-up of Intel’s and AMD’s new server CPU platforms Given these factors, suppliers are compelled to offer larger price concessions on enterprise SSDs even though the contracts for this fourth quarter have already been arranged Due to the new wave of negotiation activities, QoQ declines in contract prices of enterprise SSDs have exceeded the earlier estimation and now come to 23~28% as well
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/10/13
Affected by tight wafer supply, lead time for SSD controller IC and PMIC components was prolonged to 32 weeks in 2021 All controller IC suppliers generally give priority to supplying NAND Flash manufacturers, so production at module factories could not meet SSD demand in the retail market during that time In 2H21, the supply of SSD-related components improved quarter by quarter and various module manufacturers boosted their SSD shipments in order to upsurge their annual performance According to TrendForce research, SSD shipments through global distribution channels reached 127 million units in 2021, with an annual growth rate of 11%
This global SSD ranking is based on the shipment volume of module houses’ own in-house brands in the distribution channel market as a standard for calculation and NAND Flash manufacturers are not included NAND Flash manufacturer supply accounts for approximately 42% of the overall distribution channel market while module factory shipments account for approximately 58% When SSD-related components were hard to come by, NAND manufacturers’ supply chain management occupied a superior position compared to module houses, so NAND manufacturers’ market share in the overall distribution channel market increased compared with 2020
Looking at changes in the global SSD market in 2021, first, SSDs were in short supply due to a shortage of SSD related components in early 2021 and large module houses adopted a limited supply strategy in response as product prices rose This increase in overall profit also prompted more module houses to follow suit Some large module houses obtained support from SSD controller IC manufacturers due to their supply chain advantages, increasing their market share Second, due to an inability to obtain a supply of upstream wafer production capacity in recent years, newly introduced controller ICs from mainland China have become a bottleneck in the supply of SSD controllers for certain Chinese manufacturers Third, the pandemic festers and gaming-related demand remains strong, so the ranking of brands focused on gaming laptop-related products has also moved up
The present ranking of SSD module manufacturers maintains a trend of the rich getting richer with the top three in terms of shipments remaining Kingston, ADATA, and Kimtigo Of the top three, only Kingston’s market share moved lower Due to their huge production demand, shipment volume was affected when wafer supply was too limited to meet order lead time The biggest change on this list is Transcend’s ranking rising sharply from tenth place in 2020 to sixth place, as well as newcomers Powev and GIGABYTE
Transcend's long-term brand advantage comes from obtaining support from SSD controller IC manufacturers and the company’s shipments have grown significantly as a result In particular, its SSD products are specially designed to meet the needs of Apple's notebook upgrades As Apple's laptop market share grows, demand for relevant Transcend products increased and its SSD shipment market share rose to 5% in 2021 Benefiting from its long-term operation in the high-end gaming market and diversified product solutions, Powev entered the top ten as demand for high-end performance and game-related products retains strong growth momentum Gigabyte also benefited from the company's efforts to expand the supply of game-related components with its motherboard products driving SSD shipments
Penetration rate of PCIe specifications continues to rise, global market disposition heralds future growth momentum of various brands
The pandemic continuously disrupted the supply of SSDs in 2021 In addition to the supply of SSD controller ICs, a diversified distribution of production centers was also a key factor in enhancing the momentum of shipments Looking to the future, the growth momentum of module factories focused on selling SSD interfaces will gradually shift from SATA to PCIe However, compatibility issues are also more complicated than that of SATA SSDs due to the manifold increase of PCIe interface transmission speeds Providing comprehensive services to assist in SSD product upgrades can enhance brand recognition and continue to boost shipments TrendForce believes, in addition to cost, the ability to provide comprehensive global production and sales services will be an important factor in continuing to increase PCIe SSD shipments in the future
Technology of storage products from Chinese enterprises continues to improve, the goal of localizing SSD production in China is just around the corner
TrendForce has also observed that in the SSD supply chain, the proportion of localization in China is increasing Especially in controller IC technology, a number of manufacturers have gradually embarked on PCIe controller IC research and development and some module manufacturers have even partnered with Chinese servers to develop enterprise SSDs After Intel started gradually withdrawing from Optane SSD supply, an existing Chinese manufacturer, DapuStor, has already adopted Kioxia XL Flash to launch an alternative solution with similar performance, hoping to capture market orders in this storage class memory (SCM) after Intel's withdrawal The above development clearly shows the role of Chinese manufacturers in the SSD supply chain gaining strength and there will be opportunities in the future to continue seizing market share through upstream and downstream integration
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
