[Peace&Chips] Ugly Duckling 'Naendeu' Turnaround... "Samsung Sales Expected to Double in Q1"

Sunny Outlook for NAND Market... Positive Forecasts Emerge
Will Samsung and Hynix Double Q1 Sales?

Both Companies Expected to Turn NAND Profitable Within the Year
"NAND Prices to Continue Rising This Year"

The representative products in the memory semiconductor market are DRAM and NAND flash. Both products are used to store information, but there are differences in their detailed functions. DRAM is called volatile memory because the stored information disappears when the power is turned off. NAND, on the other hand, retains information even when the power is off, so it is called non-volatile memory.

DRAM and NAND also differ in data processing speed. DRAM is fast, so it serves as the main memory, or primary storage. NAND is relatively slower but has advantages in storage capacity, so it is used as secondary storage. Because of this, the DRAM market size is larger and receives more industry attention than NAND. Samsung Electronics and SK Hynix also have a higher business proportion in DRAM.

Last year, the memory industry showed a particularly large temperature gap in how DRAM and NAND were viewed. DRAM was treated like a relief pitcher, while NAND was treated like an ugly duckling. Although the overall market situation was poor, DRAM showed a remarkable growth trend in high-value-added products for artificial intelligence (AI), such as High Bandwidth Memory (HBM). On the other hand, NAND lacked products or issues to lead demand recovery, so manufacturers cut production more than DRAM.

This year, signs of spring are deepening in the NAND market as well. Last year, the mainstream forecast was that the market would show negative growth throughout this year, but recently, positive predictions about market recovery have emerged. NAND industry production cuts continue, and prices are rising due to improved customer inventory for smartphones, PCs, and other devices. The increase in AI devices is also a hopeful factor for demand growth.

Market research firm TrendForce said, "Although it is a traditional off-season, NAND market sales in the first quarter are expected to increase by 20% compared to the previous quarter," and "As customer orders continue to rise, the average fixed transaction price of NAND will increase by 25%." Kim Woo-hyun, CFO of SK Hynix, also said at the January earnings announcement, "The price increase trend for NAND is expected to continue for the time being."

The first-quarter sales outlook for NAND companies such as Samsung Electronics, SK Hynix, and U.S.-based Western Digital is bright. Securities firms like Meritz Securities and SK Securities expect Samsung Electronics' first-quarter NAND sales to be around 6 trillion won. This would be about double the sales of around 3 trillion won in the same period last year.

SK Hynix expects first-quarter NAND sales to exceed 4 trillion won, which means more than doubling compared to the same period last year. Western Digital, which mainly operates in the NAND business, projected first-quarter (fiscal year 2024 Q3) sales between $3.2 billion and $3.4 billion, which could be up to 21.43% higher than the $2.8 billion sales in the same period last year.

So, when will Samsung Electronics and SK Hynix turn their NAND businesses profitable? For Samsung Electronics, although forecasts vary, it is expected to exit operating losses in the first or second quarter. SK Hynix is expected to record operating profit by the third quarter. Samsung Electronics expects NAND inventory to normalize by the first half of the year at the latest, and SK Hynix expects normalization during the second half.

Editor's NoteSemiconductors, called the rice of modern industry. Although we hear the term every day, it is hard to explain it clearly. Peace & Chips will easily feed you the difficult concepts of semiconductors and the overall industry trends. Just put your spoon down and enjoy.