Signal Of TSMC'S Price Rise: The Inflection Point Of "Chip Shortage Easing" Has Been Postponed Again

      The news of TSMC's plan to raise prices, which has not been raised for many years, makes the industry uproar, showing that the global core shortage may still be difficult to alleviate in the short term. The third quarter is the peak season of consumer electronics, and the memory market, which has been rising in price, may face a new round of boom, but this may be structural.

Recently, Duan Xiting, senior vice president of marketing and OEM business of Huirong technology, said in an exclusive interview with 21st century economic reporter: "now we are facing the most serious problems of chip shortage and long delivery time with BGA packaging substrate. At present, there is still a serious imbalance between supply and demand. The capacity of wafer foundry has been full until 2022, but the terminal demand is still increasing significantly, so far, it is still unable to meet the gap. In particular, the shortage of mature process capacity is the most serious, which will be more severe in 2022 than in 2021. "

This shows that the inflection point of flash industry is not comprehensive. According to the reporter's understanding, even in the first half of this year, the market of NAND flash is still high, but DRAM's next trend may fluctuate slightly.

      Liu Yushi, senior analyst of cinno research, told the 21st century economic report that DRAM and NAND flash have huge global production capacity and inventory, so the price rise will be relatively gentle and there will not be large fluctuations easily. At present, although DRAM storage has been in the peak of periodic demand, the demand is still relatively strong in the short term, so that the price will not drop rapidly; NAND flash demand is expected to maintain a steady growth in the second half of the year. 5g communication and mobile phone products demand is obvious. The release of new machines in the second half of the year may further drive flash demand.

Storage demand continues to rise

Although the overall increase may not be as good as general parts, the storage market has been booming for some time.

This can be seen from the first half of the year's performance of upstream manufacturers and master chip manufacturers. According to the flash market statistics, the global NAND flash market scale in the second quarter of this year reached US $16.172 billion, the highest in 11 quarters, with a year-on-year growth of 11.2% and a month on month growth of 9.7%. Among them, Samsung (11.8%) had the highest quarterly revenue growth, followed by western data (11.2%) and SK Hynix (10.5%).

In recent years, DRAM with low expansion atmosphere has also achieved a higher growth rate. According to the statistics of flash memory market, the total sales volume of DRAM in the second quarter of 2021 was 24.32 billion US dollars, which was a new high in the past three years, with a 24.3% increase on a month on month basis. Among them, Huabang (36.8%), Samsung and South Asia (29.8%) had the highest quarterly revenue growth.

This shows that even if the domestic 5g mobile phone market demand for replacement fluctuates, but under the global high demand, the memory market as a whole is still in the rising range.

Duan Xiting pointed out to reporters, "we don't feel that the demand for smart phone terminal parts is poor. On the contrary, the revenue of EMMC and UFS master chips, which are mainly used in smart phones, grew by 35% - 40% in the first half of 2021 compared with the same period of last year, far better than the market performance. The increase of NAND customers in the smartphone market has driven the growth of UFS master chip of Huirong technology. Our module factory customers have also applied our EMMC and UFS master control chips to more low-level smart phones and IOT products. "

As the main control chip manufacturer, Huirong technology will continue to usher in the peak performance in the second quarter and even the second half of this year. The company's financial report showed that the second quarter achieved revenue of $221 million, a 21% month on month increase and 62% year-on-year growth.

Based on the positive market demand, Gou Jiazhang, general manager of Huirong technology, said that the company will raise the annual financial forecast again, and expects that the proportion of high profit products will continue to increase in the future, thus driving the increase of gross margin and global market share of SSD control chips. The annual revenue increased by about 782 million to 836 million U.S. dollars from the last quarter's financial report, and then increased to 890 million to 917 million dollars, an increase of 65% - 70% compared with 2020, and the gross profit rate was between 49.5% and 50.5%.

Specifically, Duan Xiting told reporters that NAND flash was expected to be oversupplied this year, but thanks to strong demand from PCs, smart phones and data centers, prices began to rise in the second quarter.

Looking forward to the future, he continued, "from the perspective of market demand, PC and smart phones grew rapidly in Q3 last year and slowed down in Q2 this year. The market began to digest excessive inventory, which took about 3-6 months; The demand for servers and data centers is that most people work at home and students are learning online due to the epidemic. In addition, the construction of 5g base stations and the increasing adoption rate of SSD in PC have been keeping a strong demand. Because the domestic market recovered the earliest after the epidemic. With the rapid increase of new consumer electronic products and intelligent products, 5g related IOT devices have also increased significantly. These are products that need storage. Despite the shortage of chips, NAND market will continue to grow steadily. "

In the process of investor communication recently, senior executives of Zhaoyi innovation also said that the market demand of NOR flash, the company's main business, was further enhanced, and more wafers were needed to support these demands, which was mainly reflected in the increasing demand for NOR flash capacity in many fields, which was the focus of attention. Similarly, in the automotive, industrial and other fields, the demand for NOR flash quantity and capacity is on the rise, and the demand is very strong.

As for product price, we expect that the total supply is less than the total demand in the whole NOR Flash Market in the second half of this year and 2022. The main reason is that the demand for capacity and quantity is on the rise in many fields. At present, the market demand is relatively strong, and the demand will continue to increase in the future; However, in terms of aggregate supply, we believe that the situation of tight supply will continue until 2022.

But in contrast, DRAM market may not have such a strong performance in the second half of the year. According to the survey conducted by trendforce group, in the third quarter, the problem of long and short materials in the supply chain has gradually emerged, which has affected the assembly of terminal products. Therefore, some manufacturers have begun to plan to reduce the number of products with relatively long materials, among which, the attitude of pen manufacturers is the most obvious. Therefore, although most of the original manufacturers still maintain a positive view on the overall market situation, with the buyer's DRAM inventory continuing to be at high level, the growth of some products in the third quarter may slow down. The agency expects that the average contract price will continue to rise in the third quarter, but the increase will converge to 3% - 8%.

The choice of development under the lack of core

There is a certain time lag in the price transmission of semiconductor products, but its impact on the production capacity of the automotive industry has been apparent, and the impact on consumer electronics is not deep, but from the overall electronic field, the impact may be multifaceted.

Duan Xiting told the 21st century economic reporter that the impact of chip shortage on the storage industry chain is complex and far-reaching“ As the main supplier of flash memory master chip, we are actively engaged in solving the problem, speeding up the transfer of mature process products to advanced process products with abundant production capacity, so as to spare some mature process chip shares for distribution. "

"In the principle of supply, we will give priority to avoiding chain break, high gross profit and irreplaceable application supply. Therefore, we painstakingly ignore some low-level products, such as USB2.0 and microSD 2.0 with 55nm process, and even reduce the supply of USB 3.0 main control products." He continued.

Domestic storage manufacturers have similar decisions. Recently, senior executives of Zhaoyi innovation also told investors that under the situation of tight overall capacity supply, the company will choose to adjust the product structure to ensure the supply of key and high-performance products, which is the case in all business sectors of the company, which is also the most important reason for the improvement of gross profit rate of all product lines in the first half of the year.

Although some markets have recently shown the controversy over channel price hikes, Duan Xiting pointed out that no similar phenomenon has been felt at present“ We strictly control the agents and do not allow them to hoard goods or drive up prices. All customers and partners also actively cooperate with us to change the proportion of products and ensure a win-win situation. In the case of insufficient chips, we will pay close attention to the market situation and carefully examine whether the customers' orders are actual demands. "

In the long run, for the storage industry, mining more diversified markets besides consumer electronics is the direction to continue to break through.

Liu Yushi believes that the demand for NAND flash and DRAM in the second half of this year is mainly focused on communication products, which is different from the situation in which PC is driven by demand such as distance education last year. Enterprise SSD has a long-term stable cyclical demand, and vehicle storage is also a market with explosive potential. Compared with the demand of consumer products, the prospects of these two markets are undoubtedly broader.

Duan Xiting also told reporters that Huirong's next target will be in the automotive and data center market. In the automotive market, Huirong's SSD master control chip has already entered Tesla, Audi and other well-known car factories through cooperation with NAND manufacturers. Huirong's Ferri single chip storage solution has been adopted by many Japanese and German automobile manufacturers. In terms of data center, in addition to actively developing the next generation of PCI gen5 enterprise level SSD master, Huirong's generation of enterprise level SSD master has been shipped to several major customers, and has successfully entered the domestic e-commerce market supply chain with the help of its Shanghai Baocun technology, including Alibaba and Baidu.