Is The Price Of Memory A "Slow Cow" Or An Inflection Point? "The Price Has Risen By 60% Since Then."

Even though Huaqiang North began to resume work in recent days, Wu Bo did not stop during the Spring Festival. Especially in the middle of 2 months later, his B2B semiconductor business platform set up shop orders demand suddenly soared.

In terms of storage, we mainly sell Flash products on our platform. After years, the purchase price has risen by about 20%-25%, and the selling price is also rising, but our sales doubled. As deputy general manager of the mall, Wu Bo sees this round of memory rising process in the eyes, which is behind the stimulation of the market application terminal and the promotion of the channel end and downstream stocking and stockpiling behavior.

In the past 2018-2019 years, the storage industry has experienced a small cycle, and the price of storage has dropped sharply due to the oversupply of the market. With the coming of a new cycle, the price of memory has already been quietly opened.

In the entire electronic industry chain, memory occupies an important position. For mobile phone products only, the cost of storing components accounts for 2-3 of the whole machine. With the recent outbreak of cloud storage and data center needs, the demand for storage has been ignited.

However, the further spread of the epidemic in the world has brought an impact on the electronics industry chain. As the upstream industry chain, Japan and South Korea have mastered the supply of most of the core components such as raw materials, memory and panels. In the near future, Samsung and SK Hynix have confirmed that there are staff infection in some factories and processed accordingly.

In twenty-first Century, an economic report reporter interviewed many parties, and found that the industry generally agreed that the relevant industry chain enterprises in Japan and South Korea had appropriate measures to deal with the epidemic situation and were not affected by the infection.

The greater pressure in the future comes from the demand side. If the epidemic continues, it will bring new challenges to the entire electronic industry chain.

Rising prices quietly

Although the price rises were spectacular, Wu Bo felt that this market was obviously different from the previous upward cycle.

"During the downturn in 2019, the price has already been retraced, so the price increase is actually within everyone's psychological expectations and is acceptable." He told reporters that by comparison, this price increase is not so steep in the previous year, it belongs to the "slowly rising" rhythm.

Storage master chip factory has already felt the power of price increase. Hi Rong, a senior vice president of marketing and R & D, told the twenty-first Century business news reporter that before the outbreak of the new crown, the price of NAND began to rise.

"The reason for the demand is, first, the strong demand of data centers. The data center gradually uses more SSD to replace mechanical hard disks, which is a very important market application for NAND. Second, the storage capacity of mobile phones is still increasing and demand continues to improve." He continued to say that in 2019, unexpected accidents such as outage or fire occurred in the storage plant were adverse news to the supply side, and indirectly led to price uplift.

This is confirmed by Wu Bo. He told reporters that demand for cloud storage, data center, financial services, e-commerce and games suddenly rose, and some domestic enterprises took orders such as Nintendo's related components to support demand side.

The need for good memory has also enabled some speculators to take an active part in it. According to the twenty-first Century economic report reporter, some speculators directly from the original factory to communicate with the goods, from the year ago to now, the price has risen 60%.

The new crown epidemic is like a booster, which adds support to the price of storage. "Because everyone stays at home, there is more time for Internet access and greater demand for data, which is why it has entered the second quarter (the order contract needs to be negotiated in advance, this refers to the contract price). The price of the NAND Flash contract has not slowed down, but has continued to rise. We see that NAND's second quarter contract price has risen by about 15% over the first quarter. " Duan Xiting said.

Another reason why prices have started to rise is from the node of the new year. Wu Bo told the twenty-first Century business news reporter that during the new year, the downstream enterprises took into account the uncertainties of logistics and suppliers' vacation time and other factors, and would spend more than half a month to a month.

During the epidemic period, even if the original storage plant was not affected, the domestic storage and packaging plant was labor-intensive, but it was hamper by the resumption of work. As a result, the slow supply chain replenishment and insufficient stock water level will trigger the "finding goods" in the channel, which is the precursor of price rise.

As a channel business, Li Chuang mall has also prepared tens of millions of inventory (not only memory), but found that some devices are not enough. "Our platform is currently found that the capacitor resistance is not enough, and prices are rising all the time." Wu Bo said, in the replenishment process, there are also some apprehension, afraid to catch up with the high position.

Relatively speaking, the store products in its mall are mainly NAND/NOR Flash, which are relatively long tail and fragmented (such as data centers), while another type of DRAM market is relatively specific, mainly to large customers, not in the main coverage of the electricity supplier.

"In the first half of the year, the industry generally saw a rise in SSD." Wu Bo pointed out that, however, demand and production capacity have not been fully recovered at present, showing that the price rises are somewhat weak, but the market is still very confident.

How long will the price rise?

As the key controller of the upstream memory, the operation of the relevant manufacturers in Japan and Korea has been attracting much attention. Tianfeng Securities Research Report shows that the DRAM market is mainly monopolized by the three giants of Samsung, SK Hynix and Mei Guang. The three share of the market is about 95%, of which Samsung has a share of 40%-50%, and the market share is still rising in 2019. According to the statistics of China's flash market, Samsung and SK Hynix jointly accounted for 44% of the world's NAND Flash market share in 2019.

At present, although Samsung and SK Hynix have confirmed that very few employees are infected, in fact, such storage factories are highly automated, and their operation is not affected by human factors.

Chi Bang consultancy pointed out that most of Japan's semiconductor raw material manufacturers are not located in densely populated areas, such as northeast Japan or Jiuzhou. It is reported that they are in normal operation and production at this stage, and have prepared epidemic prevention internally.

Duan Xiting told reporters that "the defense situation of three big factories in Japan and South Korea has been doing very well, without any negative impact on supply."

In the case of Hui Rong's own resumption, he told reporters that up to now, 85% of the employees of the mainland branch have already come to work, and Taiwan and other overseas companies have not been affected by the epidemic. They are working normally.

What worries us is logistics transportation. However, the analysis of paragraph Xi Ting, with the domestic manufacturers to actively resume work, the road also began to repair.

The main concern of the current market is demand. Sheng Ling Hai, vice president of Gartner semiconductor industry, analyzed the twenty-first Century economic report reporter. When the new crown didn't spread abroad, the industry thought that the market demand was only postponed. Considering that there would be additional appeals after the follow-up, it would be ready to rush at the beginning.

But the spread of the global epidemic has made it difficult to define the market demand for downstream products in the two quarter. "We can see that in February, domestic consumption is sluggish and demand is sluggish, and it is likely to spread to the whole world, which will have a huge impact on semiconductor demand." He added that once the market demand in the two quarter declines, the momentum of the increase in memory prices may disappear.

So what will the price rise of components affect downstream? Sheng Ling Hai told reporters that in fact, the memory order of mobile phone manufacturers is to go to the factory channel, that is, the manufacturers do not take the goods directly from the original factory, but to the workshop of the memory packaging factory to discuss the cooperative supply, so it will not be affected by the prevailing market price. In addition, the demand for mobile phone manufacturers is large and the contracts are mostly long-term. It also means that they are less affected by market sentiment.

However, with the advent of the 5G era, the demand for storage and read and write of consumer products represented by mobile phones has been further enhanced. Recently, a series of brand flagship models have been equipped with the most advanced UFS3.1 and LDPPR5 memory, and the capacity has also risen rapidly to 12+256G or even the highest 512G level, showing the craving for the landing of advanced technology.

Sheng Ling Hai analysis, the relative frontiers of configuration, the total number of suitable models is not as big as the mid price terminal flagship machine, for storage products, but the industry is pushing the LDPPR4 storage read and write configuration, LDPPR3 related devices will start out of stock.

The epidemic still affects the short-term performance of upstream design firms more or less. In February, Hui Rong technology released its latest financial report, predicting that the first quarter of 2020 revenue will range from 130 million to 138 million dollars, a decrease of 10%-15% compared with the previous quarter.

Duan Xiting pointed out that for Hui Rong, the second quarter business situation in Asia is optimistic, and the current epidemic has great impact on Europe and the United States, but these effects are mainly on demand side. "We will continue to focus on supply chain and terminal demand." He said.

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