The Price Rise Of Electronic Components Spreads To Memory

Editor's note

Rising prices: semiconductor industry waiting for changes in the first half of the year?

2020 is a special year with great turbulence and changes. The outbreak of new crown pneumonia has a certain impact on the global economy and various industries. In addition to the epidemic situation, the semiconductor industry is also facing the uncertainty brought by the overseas environment. On the other hand, since the second half of last year, the global demand of TV market ushered in a very obvious explosive growth, resulting in further tension between the supply and demand of TV. The industry is expected to meet the downward adjustment expectation only in the second half of last year.

In the rising price of electronic components, the memory with the largest market share in the semiconductor field can't sit still.

According to the statistics of the third-party organizations, in December 2020, several major subdivision areas of memory have started the process of price increase. As we enter the first quarter of 2021, the delivery of substitute storage factories will be extended one after another. Besides the original storage factory which originally controls the price core, more factors affecting the price begin to be gradually superimposed.

As for the price increase of components, Wu Bo, deputy general manager of Lichuang mall, told 21st century economic report that compared with the end of 2019, the unit price of customers in the mall increased from 1000 yuan to 2000-3000 yuan in the same period in 2020. In terms of products, the price of MCU and MOS tube is more than doubled; the storage field, due to its large volume, is currently increasing by about 20% - 30%.

This is closely related to the rapid changes in the downstream end market. In the second half of 2020, many domestic head mobile phone manufacturers began to increase orders. At the same time, the server market demand with sustained high growth in the first half of the year began to show a state of high inventory for a short time. Superimposed on the unstable macro environment overseas, upstream manufacturers of the industrial chain need to raise funds in time to cope with this.

Gou Jiazhang, general manager of the memory master chip factory, NASDAQ GS: Simo, has deep feelings. He told reporters of the 21st century economic report that 2020 is a special year with great turbulence and changes, and the new crown pneumonia epidemic has a certain impact on the global economy and various industries.

"In addition to the epidemic situation, the semiconductor industry also faces the uncertainty brought about by the overseas environment, which divides the whole global supply chain in two and makes the supply chain of the semiconductor market unbalanced." For this reason, he added, supply chain manufacturers need to meet the market demand divided into two parts. On the one hand, they should deal with the fear brought by covid-19, on the other hand, they must prepare for the imbalance of overseas environment, and let suppliers keep more inventory under the effect of Huawei's pull goods. As a result, "the entire global semiconductor supply chain extends delivery times to adjust supply and demand in the market."

As the demand side continues to rise, the storage industry may also usher in a high heat cycle, which also tests the judgment and scheduling ability of the whole industry.

As the demand side continues to rise, the storage industry also ushered in a high heat cycle. IC photo

Linkage price rise

Since the fourth quarter of 2020, some component manufacturers have been raising their prices. By December 2020, a number of manufacturers on the market have announced price increases for some products to the industry.

After seeing the market rumors, huiding technology, a semiconductor design manufacturer, specially issued a Clarification Announcement on December 30, 2020. It noted that some media reports said huiding would raise the US dollar prices of all products by 30% from 2021.

The company pointed out that the price increase notice letter sent by the company to downstream agents and customers was based on the supply situation. It only adjusted the sales price of some touch products GT9 series of the company, did not make price adjustment for related products of other product lines, nor sent price increase notice letters to relevant agents and customers of other product lines.

So it can be seen that the entire industrial chain is cautiously facing this sudden and relatively continuous market change.

Although Wu Bo's component e-commerce platform has experienced 10 years of development, it has also opened a momentum of accelerated development under the epidemic situation.

He told reporters that the new crown pneumonia epidemic has indeed become an accelerator. In the context of limited production capacity, small and medium-sized manufacturers will have relative disadvantages in getting goods. At this time, they will consider more channels like e-commerce that can get spot goods.

"I observed that the price hike in early 2020 started from May to June. At that time, the industry found that the overseas epidemic situation was becoming more and more serious, but the domestic industry has gradually been controlled. Therefore, some of the capacity originally spilled overseas began to return to the domestic production process." Wu Bo analyzes that since November 2020, its platform has found that the number of new customers and the total number of customer transactions have increased by more than 80% year-on-year.

In the face of the current hot market, industry insiders generally believe that manufacturers of different sizes will also have a sense of crisis, especially for small and medium-sized enterprises, which will make preparations for panic stock to a certain extent.

The reason why the price rise of components presents a ladder spread effect is that when some high profit components are out of stock, the production capacity for processing and producing relatively low profit devices will be temporarily scheduled, resulting in the demand for PC and server fields rising, the corresponding capacity will be dispatched to these fields, while the product scheduling in similar industrial fields will be similar It should be elongated.

This is also an inevitable logic at the business level. Hongta Securities pointed out in the research report that, taking memory products as an example, since December 2020, DRAM demand has turned from weak to strong, and winter epidemic has hit global semiconductor logistics, and customer delay has become the recent normal. In addition, with the closing of the year, module factories, agents and customers frequently prepare goods. Under the condition that the future demand is still strong and the prospect is broad, Korean storage plants will close accounts in advance and suspend shipment after the achievement of the performance target in 2020, and will increase the price of DRAM by 30%.

Indeed, in the storage industry, the capacity supply of the original storage plant will almost dominate the market volume and price performance in the next period of time. However, under the superposition of the new pneumonia epidemic, the original factory actually has relatively sufficient reserves. On the contrary, it is at the OEM side. Due to the need to take more consideration of the increase in labor and logistics costs, it has become another factor that affects the supply speed and price of the next period The cost factor.

From the perspective of the two major categories of flash memory market, Luo Xiang, an analyst at CEPA Research Institute, analyzed to the 21st century economic report that DRAM production would be stopped in 2020 due to the impact of the epidemic situation, power failure and earthquake. In addition, DRAM will go through 2018-2019 The weak cycle in 2008 leads to low gross profit margin. Therefore, the original head manufacturers Samsung, SK Hynix and Meguiar tend to be conservative and do not substantially increase DRAM production in 2021, which will further lead to insufficient supply of DRAM and further increase its price.

At the NAND flash level, he added that the memory demand of 5g smart phones launched by the end of 2020 will double, and most 5g mobile phones will reach 128G. Therefore, although the demand for data SSD will decline, the demand for 5g mobile phones will increase the overall demand. "However, from the supply side, major NAND flash manufacturers will also increase production lines in 2021, and the current situation of oversupply leads to a decline in the price of NAND flash."

However, the recent shortage of 8-inch wafer capacity has little to do with the shortage of mainstream flash market. Luo Xiang explained to reporters that 8-inch wafers already have mature special processes, and have advantages in small-size grain simulation content capacity or high-voltage support. Therefore, most devices with special requirements are still mainly manufactured with 8-inch wafers.

Therefore, he added, nor flash will be produced with 8-inch wafers as the main material, and its application fields include fingerprint identification chip, image sensor chip, power management chip, tactile chip and other special fields. DRAM and NAND flash memory are mainly made of 12 inch wafer.

"Therefore, the shortage of 8-inch wafers has little impact on the supply chain of DRAM and NAND flash memory industry, but has a greater impact on the price of NOR flash." Luo Xiang said.

Fast match market

As mentioned above, in the semiconductor upstream market, it is more important to judge the downstream demand trend in advance. This is also the reason why the server market demand, which was once high in mid-2020, suddenly turns into inventory in a certain period of time.

According to Luo Xiang's analysis, due to the extensive use of memory, especially DRAM, as an indispensable part of most electronic devices, in addition to smart phones, most electronic industries such as computer industry, aiot industry, intelligent automobile industry and PC graphics card will be affected by price fluctuation and shortage.

Gou Jiazhang told the 21st century economic reporter that the strength of economic recovery in 2021 will accelerate, and the epidemic situation will also drive the growth of the housing economy. Online meetings, online video, online education and other factors will continue to increase PC shipments. In addition, 5g smart phones are strong and the demand for vehicle demand is positive. At the same time, the demand for storage performance and capacity of Internet enterprise data center systems is also on the rise Increasing.

"Therefore, Huirong holds a positive view." He continued, "although there was a temporary high inventory in the server sector in the second half of 2020, the new crown pneumonia epidemic has driven the global housing economy to continue to ferment, and the proportion of cloud applications has increased. With 5g running, we believe that the environment is conducive to the long-term development of the industry. "

At the same time, he pointed out that Intel recently announced that ice lake, a new generation of 10 nm server, began to ship in large quantities and continued to expand its mass production. The increase in server demand will further promote the demand for NAND storage.

Huirong technology is also deploying accordingly. According to gou Jiazhang, the company has invested a lot in the whole data center field and enterprise SSD, and has made breakthroughs and development in the main control chip and firmware.

"With the strong demand of PC market and the popularity of 5g, the demand for smart phones and vehicles is increasing. In terms of product development strategy, in addition to client SSD master chip, we will also focus on the growth of EMMC / UFS master chip; in game applications, we will continue to grow." Gou Jiazhang continued.

Looking forward to this year, Gou Jiazhang believes that the overall market demand will continue to be hot. The main driving forces include the continued strong demand for PC OEM, the return of demand in data center and vehicle market, the strong strength of 5g smart phones, and the increasing demand for the Internet of things.

"In addition, with the mass production of 128 layers of 3D NAND this year, it will promote the sufficient supply of NAND capacity." However, due to the imbalance of global semiconductor supply chain and the shortage of production capacity, NAND flash still has the situation of oversupply. However, considering the high macro demand, as long as the correction range is not too large, it should be within the acceptable range.

"From the perspective of overall market demand, due to the continuous growth of NAND flash application market, the NAND flash memory industry will grow substantially in 2021. 2021 will also be a year of growth for Huirong technology. Although we are also faced with the situation of shortage, we will make appropriate deployment and try our best to cooperate with all customers to meet the needs of the terminal market. " Gou Jiazhang concludes.

For the platform side, the shortage environment also tests their stock preparation ability. Wu Bo told reporters that its e-commerce channel mainly focuses on the long tail market.

"Out of stock has a big impact on us. Our countermeasures are as follows: first, we should restrict sales and purchase, so that one manufacturer can not finish the goods and extend the service to a larger customer group as much as possible; second, we should require suppliers not to deliver a lot of goods at one time, but we should ensure that there is a certain amount of continuous outflow of supply to stabilize the demand; third, we should try our best to expand the number of products supplied by domestic suppliers and speed up the process of domestic substitution. "

Driven by the epidemic situation, the cycle of memory market is also changing in rotation. According to Luo Xiang, the last strong cycle of the memory market started at the end of 2016. The reason is similar to the present, which is caused by the increase in demand for smart phones and data centers. In 2019, the decline in both demand leads to a reduction in memory demand.

"At present, the memory industry will usher in a new cycle driven by the growth of new industries such as aiot, smart cars, smart wear, AI, 5g mobile phones, and AR / VR. At the same time, the iteration of memory technology nodes can also promote the demand of downstream market, thus bringing about periodic growth He added.

Luo Xiang pointed out to reporters that at the beginning of 2020, the price of DRAM has begun to rise, and the epidemic situation has led to the stagnation of memory production. At present, the global epidemic situation has not ended, and the storage demand has begun to surge. "And if enterprises want to expand production, it will take a certain time from the construction of production lines to production. It is estimated that the supply shortage in 2020 will continue until the second quarter of 2021."

He believes that the necessary conditions for the flash market to return to the balance of supply and demand are: the new crown epidemic is under control, the storage giant such as Samsung needs to keep up with the demand in the next few years, and the market must maintain strong demand for memory. "According to the observation, the storage cycle generally lasts about 6-8 quarters, and it is expected to reach the development trend of balanced supply and demand by the end of 2022."