NAND Original Factory Survives by Raising Prices, and the Memory Industry Takes a Strong Needle

Samsung Electronics announced its preliminary financial report for the second quarter of 2023 yesterday (7th). Due to a sharp decline in memory chip production and the inability to offset the impact of price declines, the median profit for the second quarter was 600 billion Korean won (approximately NT $15.62 billion), which was more than 96% lower than the same period last year and the lowest since 2009 and the past 14 years. However, the Taiwanese industry believes that the recent price increase initiated by NAND's original factory will help the memory industry to overcome the trough.

The industry points out that this rebound is mainly due to NAND's inability to sustain losses and the need to raise prices to survive. As the original factory initiates price hikes, it is expected to drive the storage industry through the trough. As the NAND Flash market prices stabilize, operational pressure on Taiwanese manufacturers such as Winbond (2344), ADATA, Team Group Inc., and PHISON is expected to ease.

PHISON CEO Pan Jiancheng stated yesterday that since the second quarter, NAND's original factory has been releasing price increase signals, including starting new orders to increase prices in July or renegotiating existing orders. This indicates that NAND's original factory cannot bear losses, but whether it can drive a reversal of market conditions still depends on overall demand and market acceptance. Recently, there has been an urgent demand for some NAND control chips, even a slight oversupply, indicating a gradual rebound in the market.

Winbond and Macronix announced their June results yesterday. Winbond's monthly growth exceeded 10% and it has been warming up for two consecutive months. The combined revenue for the second quarter was 18.81 billion yuan, with a quarterly increase of 7.3% and an annual decrease of 29.4%, ending the three consecutive quarters of decline.

The Semiconductor industry has broken away from the bottom at different speeds. Foundry model institutions are relatively supportive, and the demand for advanced processes is still better than that for mature processes. Recently, Samsung Foundry model has also continuously called out the forecast goal of catching up with, or even surpassing, the leading TSMC. Samsung expects that the profits of Foundry model in the second quarter will grow quarterly, mainly due to the stable demand and output of advanced manufacturing processes. In the second half of the year, the HPC and automotive markets related to Foundry model will recover, and the profits will continue to rebound.