Since Q3 last year, the decline in storage chip prices has narrowed, while contract prices for some storage products have increased in Q4. In Q1 2024, storage products have fully recovered, and as of Q2 2024, the storage industry is still in an upward cycle,

The periodicity of storage chips is very strong, and technological innovation and product iteration, capacity expansion and contraction, and changes in downstream application demand can all lead to fluctuations in chip prices. In order to seize market opportunities, storage factories need to make targeted layouts. Under the influence of multiple factors, how will the price of storage chips evolve, and where will the future of storage technology point?

Due to the continuous decline in storage chip prices, several major storage manufacturers experienced collective losses in 2023, with an estimated loss of record breaking $5 billion. According to a Gartner report, the global memory market size decreased by 37% in 2023, making it the segment with the largest decline in the semiconductor market.

When there is an oversupply in the storage market and there is a backlog of inventory in the upstream, the storage factory can regulate the inventory level through measures such as price reduction and production reduction. Reducing production and lowering prices are a combination of tactics. Whenever the sales price approaches the production cost, the original factory will increase its production reduction efforts until it drives up the price of storage chips.

With the joint efforts of storage manufacturers, the contract prices of NAND Flash and DRAM stopped falling in Q3 and Q4 of last year, respectively. By Q1 of this year, all storage products have recovered, with DRAM contract prices increasing by 20% and NAND increasing by 23% -28%. Market research firm TrendForce previously predicted that DRAM would slightly increase by 3% -8% and NAND would rise by 13% -18% in Q2 this year. However, in early May, it revised the Q2 data again, with DRAM expected to rise by 13% -18% and NAND expected to rise by 15% -20%.

What will be the price trend of storage chips in the second half of 2024? Due to the rapid reduction in production by flash memory manufacturers in the previous year and last year, it is predicted that flash memory prices may rise significantly in the second half of 2024. But it was unexpected that this trend would start to emerge in the first half of this year, and it is expected that the upward trend may slow down in the second half of this year, mainly depending on whether the speed of AI moving to the terminal is fast enough.

In addition to measures to adjust inventory on the supply side, the "rebound" on the demand side is also driving the arrival of a new cycle. In Q4 2023, global sales of personal computers and smartphones ended a continuous downward trend. According to Canalys data, in Q1 2024, the total shipment volume of desktops and laptops increased by 3.2%, while the shipment volume of smartphones increased by 11% year-on-year. The increase in sales of smartphones and personal computers has to some extent driven the demand for storage.

The popularity of HBM (High Bandwidth Memory) is also a positive factor. Due to its support for high-speed data transmission between GPUs and CPUs, HBM's application scenarios are concentrated in GPU graphics memory of high-performance servers, with a small portion applied to CPU memory chips. From the perspective of HBM's competitive landscape, SK Hynix and Samsung have obvious advantages - SK Hynix accounts for about 50% of the market share, Samsung accounts for about 40% of the market share, and Micron accounts for less than 10%.

After more than a year of implementation in the data center field, AI technology began to sink into edge and terminal devices. Currently, manufacturers such as Intel, Microsoft, Huawei, Lenovo, Dell, and Asus have released AI PC products. As the storage industry reached a turning point in Q3 last year, the profit margins of storage factories were gradually improving, and SK Hynix had already resumed profitability in Q4 last year. NAND Flash is mainly developing in two directions: expanding capacity and reducing costs. The market's pursuit of flash memory capacity can be divided into vertical expansion, logical expansion, and horizontal expansion.

Vertical expansion is reflected in the storage of higher stack products from the original factory, and everyone is moving towards 300 layer NAND. Representative manufacturers include Samsung, Micron, Western Digital, Armor, Changjiang Storage, SK Hynix, etc.

In addition to AI related applications, the AI market will also sink into automobiles, and stricter requirements will be placed on vehicle specification storage. Smartphones, personal computers, servers, electric vehicles... as long as there are application scenarios that AI can reach, more new forms of storage products will be available.