[Chip Talk] Reviving PC and Smartphone Demand... The Spring of Semiconductors Arrives

Qualcomm and Intel Earnings Exceed Market Expectations
Memory Prices Also Begin to Rebound
Samsung Electronics and SK Hynix "Industry Recovery Underway"

The spring of semiconductors is returning. In the second half of the year, as demand for smartphones and PCs, the core markets for semiconductors, is recovering, semiconductor prices are turning upward. Global semiconductor companies are hopeful that they can overcome the long semiconductor winter and the earnings slump.

On the 6th, global market research firms and financial investment sectors highly anticipate a revival in demand for memory products such as DRAM, in addition to high-value-added products like HBM. This is because signals of demand recovery, the most important factor for the memory market to turn into an upturn, have been detected.

Signs have actually begun to appear that the smartphone market is entering a recovery phase. Market research firm IDC reported that global smartphone shipments in the third quarter reached about 300 million units, showing a stagnant level compared to the same period last year, which is relatively good performance. Considering that the global smartphone market had shrunk for nine consecutive quarters, including a 7.9% decline in the second quarter, this is a positive signal. Qualcomm’s strong performance, representing the mobile chip market, is also noteworthy. Qualcomm’s revenue for the third quarter of this year (its own fourth quarter) was $8.67 billion, down 24% year-on-year but exceeding market expectations of $8.51 billion.

The PC market is also showing signs of recovery in the second half of the year. Intel, the number one company in PC CPUs (central processing units), forecasted that its fourth-quarter revenue this year would reach $15.6 billion, surpassing market expectations of $14.3 billion. Global market research firm Counterpoint Research also analyzed in a report that "global PC industry shipments are gradually recovering."

Prices of memory semiconductors, which had been declining for over two years, have also started a full-fledged rebound. TrendForce reported that the average fixed transaction price of PC DRAM (DDR4 8Gb) general-purpose products reached $1.50 in October. This is a 15.38% increase from $1.30 last month. Fixed transaction prices for 10 items, including DDR5 products, the most advanced DRAM standard, also rose more than 10% compared to the previous month.

Fixed transaction prices for NAND flash, another type of memory semiconductor, also increased. The fixed transaction price of 128Gb multi-level cell (MLC) NAND flash this month was $3.88, breaking a 27-month downward trend and rising 1.59% compared to the previous month.

The performance of Micron, the world’s third-largest semiconductor company and a barometer of the memory market, is also encouraging. Micron recently recorded an operating loss of $1.472 billion in the fourth quarter (June to August) of fiscal year 2023. Compared to operating losses of $2.303 billion in the second quarter and $1.761 billion in the third quarter, the deficit has significantly decreased.

Samsung Electronics and SK Hynix have also confirmed once again that the memory semiconductor market has bottomed out as they have begun a full-scale earnings recovery centered on the DRAM business. Although the memory industry still faces a heavy inventory burden and uncertainty remains about whether production cuts will continue, optimism about the memory market recovery next year is gaining momentum.

Samsung Electronics stated on the 31st of last month when announcing its third-quarter results, "Memory inventory peaked in May and has been decreasing rapidly since then, and it is expected to decrease even faster in the fourth quarter," adding, "With market recovery, the potential for memory price increases will also grow."

Kim Woo-hyun, Vice Chairman of SK Hynix, said, "The effect of memory semiconductor production cuts has become significant in the second half of the year, stabilizing prices of major products," and added, "Although next year’s demand environment will be influenced by the macroeconomic environment, at least it is expected that set shipments will grow across all applications, escaping the adjustment period of the past two years."