Production Capacity – The Memory Guy

Intel’s Losses Amid Others’ Gains

Why has Intel’s NVM Solutions Group (NSG), the owner of the company’s NAND flash, SSD, and 3D XPoint businesses, been losing money during a time when all other manufacturers are more profitable than they have been in years?

This is a question that certain investors have put to The Memory Guy for the past year or so, and it deserves some explanation.

This post’s graphic compares Intel’s NSG net profit margins to the margins published by other memory companies. (Click on it to see the whole chart.) This isn’t a completely clean comparison since the data for Samsung, SK hynix, and Micron includes DRAM, and recent quarters are missing for Western Digital (SanDisk) and Toshiba since these companies have stopped sharing comparable financials, but it still serves as a relatively clear indication that Intel’s NSG (blue) is losing money while all other companies are quite profitable.

Something seems dreadfully Continue reading “Intel’s Losses Amid Others’ Gains”

Memory Market Falling, as Predicted

It’s earnings call season, and we have heard of a slowing DRAM market and NAND flash price declines from Micron, SK hynix, Intel, and now Samsung. DRAM prices have stopped increasing, and that can be viewed as a precursor to a price decline.

Samsung’s 31 October, 2018 3Q18 earnings call vindicated Objective Analysis‘ forecast for a 2H18 downturn in memories that will take the rest of the semiconductor market with it.

Those familiar with our forecast know that for a few years we have been predicting a downturn in the second half of this year as NAND flash prices fall, followed by a DRAM price collapse. After the DRAM collapse the rest of the semiconductor market will undergo a downturn.

We’ve been calling for this downturn for some time. Dan Hutcheson at VLSI Research has been videotaping our forecast every December for the past Continue reading “Memory Market Falling, as Predicted”

Toshiba Restructuring: New 3D Fab Coming

Beleaguered Toshiba finally unveiled its restructuring plan on Friday. The plan aims to return the company to profitability and growth through management accountability.

A lot of the presentation focused on the memory business, a shining star of the Toshiba conglomerate, which has so far included appliances, nuclear power plants, and medical electronics.

Toshiba has big plans for its Semiconductor & Storage Products Company, calling it “A pillar of income with Memories as a core business”. The company plans to enhance its NAND flash cost competitiveness by accelerating development of BiCS (Toshiba’s 3D NAND technology) and by expanding its SSD business. There are three parts to this effort:

Grow 3D NAND production capacity
Speed up 3D NAND development
Increase SSD development resources

This post’s graphic is an Continue reading “Toshiba Restructuring: New 3D Fab Coming”

3D NAND’s Impact on the Equipment Market

A very unusual side effect of the move to 3D NAND will be the impact on the equipment market. 3D NAND takes the pressure off of lithographic steps and focuses more attention on deposition and etch. The reason for going to 3D is that it provides a path to higher density memories without requiring lithographic shrinks.

This sounds like bad news for stepper makers like ASML, Canon, and Nikon while it should be a boon to deposition and etch equipment makers like Applied Materials, Tokyo Electron, and Lam Research.

In its summer 2013 V-NAND announcement, Samsung explained that it would be Continue reading “3D NAND’s Impact on the Equipment Market”

SIA: Memories Drive Record Semi Revenues

The SIA yesterday released the WSTS semiconductor sales data for September. Monthly revenues reached a record $27 billion driving third-quarter revenues to their own record of $81 billion. This was the seventh straight month of semiconductor growth, the first such run-up since 2010.

This quote, by SIA CEO Brian Toohey really caught The Memory Guy’s eye: “Sales of memory products have increased sharply compared to last year and continue to be a major driver of industry growth.”

A lot has been happening to drive this increase in memory revenues: The recent SK hynix fire increased DRAM prices, but Continue reading “SIA: Memories Drive Record Semi Revenues”

A Retrospect of Toshiba’s NAND Production Cut

There are some who still believe that Toshiba made good on its announcement to cut NAND flash production by 30%. Let’s take a close look to see if that really happened.

Readers may recall that Toshiba stated last July that it would immediately cut NAND flash production by 30%. At the time NAND was selling below cost for spot prices as low as 31 cents/GB.

The Memory Guy questioned both the wisdom of the move and its authenticity in a blog post at that time, since this level of cut would reduce Toshiba’s market share while increasing its Continue reading “A Retrospect of Toshiba’s NAND Production Cut”

Samsung DRAMs in Massive Leibniz SuperMUC

Today Samsung announced that its chips are used exclusively to make up the 324-terabytes of DRAM in Germany’s new Leibniz Supercomputing Centre SuperMUC supercomputer.

Samsung’s release tells us that the SuperMUC, the most powerful supercomputer system in Europe, is an IBM System x iDataPlex dx360 M4 server built using over 18,000 Intel Xeon CPUs and over 80,000 4GB DRAM modules from Samsung. (Simple math makes this out to be 82,944 modules.)

That looks like a lot of silicon! Let’s see how much that might be.

A 4GB parity DRAM module would use nine 4Gb DRAM chips, which Samsung appears to Continue reading “Samsung DRAMs in Massive Leibniz SuperMUC”

Toshiba to Cut NAND Production by 30%

In a surprise announcement Toshiba has said that it will immediately cut NAND flash production by approximately 30%. The company explains that this is being done “to reduce inventory in the market and improve the overall balance between supply and demand.” Toshiba’s release implies that this move is expected to improve prices, which have dropped as low as $0.31/GB recently.

By common measures of market share, which typically leave out SanDisk (for reasons too complex to discuss here) Toshiba holds a share of roughly 30% of the NAND flash market. By cutting its output by 30% Toshiba would be reducing overall NAND supply by 10%. If we were to include SanDisk, then that percentage would decrease to about 7.5%. Either one of these is significantly more than Continue reading “Toshiba to Cut NAND Production by 30%”

Why DRAMs are Like Steel

Over lunch today I had a conversation with an alum of McKinsey Consulting who remarked that the DRAM business behaved in a way that was similar to the McKinsey Steel Model. For those unfamiliar with this model I found a slideshow HERE that refers to it a good deal. (So far I have not found a tutorial on the model itself, but if anyone knows were to find it The Memory Guy would highly appreciate hearing about it.)

One interesting thing is that this particular McKinsey alum was not the first to point this out to me. About 15 years ago a family friend/McKinsey alum told me exactly the same thing. It seems that the economics of the DRAM business have changed little over the past 15 years, and the McKinsey steel model applies to DRAMs just as well now as it did then.

In a nutshell, the model posits that the market price for Continue reading “Why DRAMs are Like Steel”

DRAM Consolidation in 2012?

2012 is likely to be a year in which the DRAM market consolidates a little bit more.

Consider this:

At its peak in the late 1980s the DRAM market sported 23 suppliers.
Today there are 6 suppliers of any note: Samsung, Hynix, Micron, Elpida, Nanya, and Powerchip
The already-depressed market is only going to worsen in 2012. Capital spending in 2010 is seeing to that. Although many believe that prices cannot get any lower, that is exactly what they will do in 2012. Continue reading “DRAM Consolidation in 2012?”