When you talk to an old investor in the semiconductor memory industry, you will see that he is facing the calm attitude of this ambiguous industry. Because the factors that undermine profit always exist, and some factors may overwhelm your optimistic logic when investing.
One of today's topics is that the NAND industry has entered one of the true transition periods after more than 20 years of history. 3D NAND is maturing, bringing unprecedented high density and low cost, bringing new opportunities in data centers and mobile devices.
Driven by these new applications, TAM is on the rise. Profits are also rising, supported by strong demand and some capacity constraints. But not every company benefits equally.
Samsung has a 40% share of revenue and a larger share of profits. Under Samsung, Toshiba, the second largest producer affected by the turmoil, as we discussed earlier, Toshiba’s turmoil and the technological advantages of its competitors have given Magnesium and Intel a golden opportunity to make them in the industry. Occupy a certain percentage of revenue and profit share.
The storage industry will face challenges in 2020This is a good day, right? Yes, if we only consider the next few years, it is true, but after 2020?
In this business, PE multiples are always subject to the face-to-face nature of supply and demand. With the rise of the Internet of Things and new opportunities in data centers, demand seems relatively certain. But what about the supply? Greater density and continuous technological advancement may scare some people, but it is often forgotten that the initial conversion from plane to 3D will increase the cost of the chip by 40%, and then each step of the process will be from the wafer supply. Subtract 10-15%.
In short, when the industry finally converted flat wafers to the 3rd generation in 2019 (and in some cases the 4th generation), the NAND capacity of 1.3 million wpm in 2016 will be reduced to only 500kwpm.
There is no doubt that the NAND industry is increasing the capacity of 3D - Magnesium and Intel have each established a new 3D manufacturing plant, and other suppliers are also increasing. But the problem is that industry discipline has been kept very good. In addition, we are faced with the problem of disruption of plane conversion and 3D production, all of which combine to make the growth of NAND bits in 2017 below the compound annual growth rate of 40%.
According to the forecast, excluding the current demand relationship (ie, the demand trend is 40-45% compound annual growth rate), the future supply dynamics of the industry should be a function of the following factors:
(1) Fab equipment suppliers will have stronger etching, so that the number of chip layers will exceed 64 layers in 2018.
(2) String stacking is effective in 3-4 layer stacking.
(3) 3D production is increased to equal to the plane output (90% +), only the old manufacturers are bragging about this.
(4) Whether Toshiba’s acquisition time has seriously delayed Flash Ventures’ Fab 6.
If all these factors are satisfactorily resolved, then in 2019 or 2020, the industry may be in an oversupply situation. If the problem is not resolved, then 45% of the demand is likely to overwhelm the supply by more than 15-20%. The reality should be somewhere in the middle, so compromise, I agree with the odds given by the veteran's companions.
In any case, Samsung will get a 40% share, but Magnesium and Intel can get more shares from Toshiba, Western Digital and SK Hynix, provided that no other changes affect the aggregate supply equation. Personally, (as I wrote), I feel that demand will exceed current estimates, but even if my optimistic forecast is not established, the situation is that the health of the industry is firmly in the hands of suppliers. Even if all the technical drivers are realized, a slight constraint on the supplier will maintain a good profit in the industry.
Stage Display,Rgb Laser Animated Light Show,Lighting Wall Lamp For Outdoor Building,Residential Holiday Lights
Kindwin Technology (H.K.) Limited , https://www.ktlleds.com