Memory Semiconductor Market Trends and Future Outlook

Executive Director Lee Se-cheol predicts a mixed outlook for the memory semiconductor market next year, with decoupling trends and premium product demand driving changes.

### Turning Point in the Memory Semiconductor Market
The memory semiconductor market is facing significant challenges, with **falling stock prices** and concerns about **macroeconomic conditions and oversupply**. Micron's strong mid-year performance report has unexpectedly **boosted stock prices**, but the outlook for next year remains **divided**. The legacy market, particularly for DDR4 and low-end DDR5 products, is struggling due to **poor consumer device sales and surplus inventory**, but a decoupling in supply is expected to **improve the situation in the second half of next year**.

### Shifting Demand and Supply for DDR Products
The demand for DD4 is decreasing while DD5 is rising, with expectations of **75% demand for DD5 next year**. The supply is also following this trend, leading to a reduction in DD4. The market has improved due to demand from servers and AI accelerators, with a **positive shift in sentiment for DDR5 and HBM products**.

### The Impact of Memory Capacity Changes on Demand
The increase in memory capacities, such as **8GB, 12GB, and 16GB**, is expected to drive additional demand, despite current market uncertainty. HBM products are changing frequently, with HBM **2, 3, and 4** being released in succession, leading to a **significant consumption of capacity**. The NAND market is experiencing a decoupling situation, with weak demand in mobile and PCs, but **steady growth in server demand**, while overall profits in the memory market are expected to **increase next year**.

### The Current State of the DRAM Industry
Bit growth in the DRAM sector has decreased to the **mid-10% range**, despite an oversupply and previous years of higher growth. The industry's perception of memory as a **commodity** and the presence of global competitors, particularly in **Taiwan and China**, are influencing the market dynamics. CXMT's significant wafer capacity and production at the end of the **10-nanometer process** may have a substantial impact on the Chinese market, potentially **increasing its market share** and posing a **long-term threat** to other companies.

### The Competitive Landscape of DRAM and HBM
The company in question is not significantly impacted by cost and profit variations, leading to a **concerning five-year gap in product development**. Hynix has taken the lead in the premium market for HBM, showing a **shift in competitiveness from Samsung**. Both Hynix and Micron are sold out for next year's HBM, indicating **fixed contracts and prices**, while Samsung's efforts to catch up may face challenges due to **recent management changes**.

### The Increasing Complexity of HBM Supply
The volume of HBM is rising, but its **semi-customized nature** and significant customization in HM4 are making supply chain management challenging. The continuous product changes and initial demand issues are expected to maintain HBM's **premium pricing** next year, with entry-level products stabilizing. Profit margins are likely to improve for **premium non-memory companies**, while those in the commodity market may be adversely affected, leading to a **departure from past patterns**.

### The Foundry's Shift and Market Competition
The foundry is moving towards a **customer service-focused approach**, as the days of simply **waiting for volume** are over. Micron is entering the market with **significant revenue projections for 2024**, potentially challenging Hynix's dominance. The competition for HBM samples is intense, with the first company to **establish itself gaining a crucial advantage** and making it **difficult for latecomers to enter the market**.

### HBM's Impact on DRAM Market and Company Investments
HBM's bit growth rate is around **6%** this year and next, with revenue growth potentially **exceeding 20%**. Hynix reported HBM's sales share **surpassing 20%** in the second quarter. Companies are struggling to adapt to HBM's standardization, leading to a **reconsideration of expansion plans** and a slight adjustment in **CapEx investments** for DRAM and commodities.

### Insights on the Memory Semiconductor Market: Challenges and Future Outlook
* 📉 Executive Director Lee Se-cheol from Citigroup Global Markets Securities discussed the current challenges in the memory semiconductor market, highlighting **significant stock price declines** and concerns about **macroeconomic conditions and oversupply**.
* 📊 Despite negative market sentiment, Micron's strong mid-year performance report has led to a **surge in stock prices**, indicating a **potential positive shift for domestic companies**.
* 🔍 However, there are divided opinions regarding next year's outlook, with expectations of a **weakened second half** due to **poor legacy product performance** and **ongoing inventory issues**.
* 📉 The legacy products, particularly **DDR4 and lower-end DDR5**, are anticipated to struggle, while a transition to **higher-end products** is expected to **reduce their production and improve market dynamics**.
* 🚀 Micron's fiscal year results indicate a **significant increase in server segment demand**, driven by the **rise of AI** and the transition from **DDR4 to DDR5**, although conventional PC and smartphone markets remain weak.
* 💡 The overall memory market is projected to see **profit increases next year**, despite challenges faced by legacy products, with a notable focus on **high-performance products like HBM**.
* 📈 In terms of NAND, while mobile demand is weak, the steady growth in **ESD for servers** suggests a **mixed outlook** for the segment.
* 🤔 The discussion concluded with insights on market dynamics, emphasizing the **importance of early market entry** for companies in the evolving landscape of **high-performance memory products**.

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