Amid rising global trade tensions in 2019, the semiconductor industry is experiencing revenue declines as it struggles with the changes and uncertainties resulting from the technology war between the US and China. Flash memory prices peaked in 2017 but then started to go on a downward trend until reaching a bottom in 2019. With the tug of war between market demand and production capacity in addition to the shift in product segmentation, there are still global economic uncertainties going forward. However, a slew of new applications enabled by 5G x AI technologies are catching market attention, including automotive electronics, artificial intelligence (AI), 8K TV and streaming video, smart home, and smart IoT. They will open up new opportunities as the year 2020 unfolds.
Ming-Cheng Lin, Macronix marketing center director, expects the year 2020 to bring favorable news to memory suppliers as the flash memory market welcomes a strong demand for memory chips, which will accelerate a change in demand for high-capacity memory products and future development. Prices of all types of flash memory products are surging, followed by those of DRAM. What is noteworthy is that with limited foundry capacity on top of priority planning and capacity reduction, rapid advances and transformation of high value-added memory products as well as memory chip process improvements and breakthroughs, Macronix is poised for a wave of steady growth as the market embraces surging market expansion.
NOR flash enjoys ongoing popularity with flourishing applications to keep fueling growth
"Memory demand from new applications is on the rise, calling for a seven percent to 10 percent increase in production capacity," said Lin. "However, supply unable to keep up with demand may be the main reason for the current surge in memory prices. True Wireless Stereo (TWS) earbuds such as AirPods and AirPods Pro, as well as a new generation of smartphones coming with OLED displays, are boosting demand for memory products. Moreover, with micro-servers being increasingly used at 5G base stations, data center equipment and server suppliers are focusing efforts on edge computing technologies, making the segment a key area of competition, which also exacerbates memory shortages.
Citing NOR flash as an example, Lin pointed out that global semiconductor supply has dropped from 900,000 wafers per month to 750,000-800,000 wafers, calculated based on 12-inch equivalent wafers. Buoyed by continuingly growing innovations of small-sized smart devices, NOR flash demand remains high with a six percent CAGR between 2018 through 2023. Although NOR flash's costs may trend downward due to its large supply, the global NOR flash market will maintain a US$2 billion market worth, thanks to growing demand. As related production capacity is unlikely to see any further expansion, latecomers to the NOR flash memory market will have difficulty catching up with existing market leaders.
Macronix secures its lead in the NOR flash market, targeting 256Mb or larger medium- and high-capacity products
With U.S.-based NOR flash firms exiting the market, Macronix has stepped up to fill the void. Furthermore, as most China-based competitors are fabless design houses, they sustain a more serious impact from foundries giving priority to producing chips with higher profit margins such as contact-image sensors. The situation favors Macronix, allowing it to maintain a leading position.
In analyzing NOR flash products with different capacities, Lin further noted that, despite only representing 10 percent of the shipments to the market, 256Mb and larger NOR flash products contribute 30 percent to 40 percent of the total revenues. The competition in the segment is also less intense. In view of this, Macronix has decided to focus on 256Mb and larger medium- to high-capacity NOR flash products, making the category its breadwinner and a major growth driver that boosts its 2020 revenues and profitability.
Cost advantage and in-house production maximize SLC NAND flash benefits
Securing the largest share in NOR flash and ROM markets, Macronix is stepping up efforts toward its latest NAND flash, making it another important product line. Commenting on the market of SLC NAND, which is often used in embedded systems, Lin spoke candidly that the cost advantage and in-house production are the key to success. Cost is the main consideration to system integrators when choosing SLC NAND, so suppliers have to stay ahead in semiconductor process technologies or they will not be able to keep up with customer requirements on cost. As such, Macronix led the industry in producing SLC NAND on the 19nm node after making a more than NT$10 billion capital investment. Macronix launched a new-generation SLC NAND solution in 2019, guaranteed with not only the absolute cost advantage but also industry-leading chip capacity and size.
Meeting the requirements and trends of iconic IoT applications such as smart city and smart home, SLC NAND is widely used in white goods including refrigerators, air conditioners and even cleaning robot. This goes to show that growing use of and demand for SLC NAND will become a sure trend. With its capacity expansion plans clicking into place, Macronix will be able to maintain stable production and prices and therefore is poised to capture exclusive business opportunities.
As Macronix's NOR flash is being used in most 5G base stations, production priority will increasingly be committed to 5G applications. Although the prosperity is exciting, what Macronix hopes to achieve is to obtain more market share amid the flash market reshuffling and to capture the opportunity that has opened up with the market changes. Despite the upcoming memory price rises, Macronix will still endeavor to assist customers to achieve success.
Ming-Cheng Lin, director of Marketing Center, Macronix
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