The NAND Flash industry saw a revenue increase of 28.1% in the first quarter, with expectations for continued growth in the second quarter.
As the semiconductor industry gradually emerges from its downcycle, memory, which is a more cyclically volatile segment within the semiconductor industry, has shown significant signs of recovery this year. TrendForce reports that AI servers began adopting enterprise-grade SSDs from February, subsequently bringing in a large number of orders. In addition, PC and smartphone customers have been increasing their inventory levels to cope with rising prices. This trend has driven an increase in the prices and shipments of NAND Flash in the first quarter, leading to a 28.1% increase in quarterly revenue, reaching $14.71 billion.
Significant changes in the market ranking occurred this quarter, with Micron overtaking Western Digital to take fourth place. Benefiting from lower prices and shipments compared to competitors in the fourth quarter of 2023, Micron's revenue increased by 51.2% sequentially in the first quarter of 2024, reaching $1.72 billion, the highest in the industry.
Samsung continues to lead the market with a 28.6% sequential increase in revenue to $5.4 billion, thanks to buyers continuously increasing inventory and the recovery of enterprise-grade SSD orders. Although the outlook for consumer product orders in the second quarter is cautious, the expected increase in NAND Flash contract prices is expected to help Samsung achieve a revenue growth of over 20% in the second quarter.
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It has been reported that Samsung Electronics is actively exploring "Hafnia Ferroelectrics" as the next-generation NAND flash material, hoping that this new material can stack more than 1,000 layers of 3D NAND and achieve petabyte-level SSDs. If the development of the above material goes smoothly, it will exhibit ferroelectricity under certain conditions, is expected to replace the oxide film currently used in 3D NAND stacking technology, and enhance chip durability and stability. Samsung Electronics executives predict that by around 2030, the number of stacked layers of its 3D NAND will exceed 1,000 layers. Samsung executive Giwook Kim will give a technical presentation in June this year, analyzing the key role of Hafnia Ferroelectrics in the development of V-NAND technology with more than 1,000 layers. This achievement is considered to promote the further development of low-voltage and QLC 3D VNAND technology.
Previously, there were reports that Samsung plans to launch the 10th generation of NAND chips next year, using triple-stacking technology to reach 430 layers, further increasing the density of NAND and consolidating and expanding its leading advantage.
The SK Group (SK Hynix and Solidigm) saw a 31.9% sequential increase in revenue in the first quarter, reaching $3.27 billion, thanks to strong smartphone and server orders. Solidigm's unique floating gate QLC architecture helps maintain strong demand for high-capacity enterprise-grade SSDs. The shipment growth of the SK Group is expected to exceed other suppliers in the second quarter, with an expected revenue increase of about 20%. On May 9, SK Hynix announced the development of a mobile NAND flash memory solution product "ZUFS (Zoned UFS) 4.0" for on-device AI.Kioxia's Q1 output is still affected by the production reduction in the previous quarter, with a slight sequential growth of 7% in shipments. However, the rise in NAND Flash prices has driven a 26.3% sequential increase in revenue to $1.822 billion. Benefiting from increased supply and pricing flexibility, Kioxia expects a revenue growth of about 20% in Q2, with further expansion in enterprise-level SSD shipments. In the first quarter of 2024, Kioxia's revenue increased by 31% year-on-year to 322.1 billion yen, marking the first positive growth in nearly seven quarters; operating profit also turned from a loss of 171.4 billion yen in the same period last year to a profit of 4.39 billion yen (a loss of 6.5 billion yen in the previous quarter), marking the first time in nearly six quarters that it has turned a profit; the consolidated net profit also turned from a loss of 130.9 billion yen in the same period last year to a profit of 1.03 billion yen (a net loss of 6.49 billion yen in the previous quarter), marking the first time in nearly six quarters that it has made a profit.
Looking at Kioxia's entire fiscal year of 2023 (April 2023 to March 2024), its consolidated revenue decreased by 16% year-on-year to 1,076.6 billion yen, and the consolidated operating loss amounted to 25.27 billion yen (an operating loss of 9.9 billion yen in the fiscal year of 2022), and the consolidated net loss amounted to 24.37 billion yen (a net loss of 13.81 billion yen in the fiscal year of 2022), marking the second consecutive year of losses, with the loss amount setting a new high record since the predecessor "Toshiba Memory" became independent in April 2017.
Western Digital's Q1 shipments were affected by a significant decline in retail market demand starting in February, but the rise in NAND Flash contract prices drove a 2.4% sequential increase in revenue, reaching $1.71 billion. Despite a cautious outlook for the PC and smartphone market, Western Digital still plans to increase the development of enterprise-level SSD products to promote future growth. However, due to the longer verification time for enterprise-level products, the short-term increase in shipments is limited, and Q2 revenue is expected to be flat.
PC and smartphone customers have increased their NAND Flash inventory levels for the second quarter, and the growth in terminal demand has not met expectations, leading to more conservative procurement by brand manufacturers. The surge in bulk orders for enterprise-level SSDs continues to drive a 15% increase in the average price of NAND Flash, and TrendForce estimates that NAND Flash revenue will increase by nearly 10% in the second quarter.
The AI era is coming, and large models will accelerate the application and popularization of AI, with the demand for storage, especially high-end storage, rapidly increasing. Shanxi Securities, based on production guidance released by several major storage manufacturers, estimates that the overall capital expenditure in 2024 is expected to be higher than in 2023, mainly to support high-end storage products such as HBM (High Bandwidth Memory) and DDR5. The operation of AI large models requires the transmission of a large amount of model data, and due to the limitations of the storage wall, the demand for high-bandwidth memory chips is urgent.
