As the semiconductor industry enters a period of slowing, if not declining growth, the expectation is for overall Capex spending to slow as companies manage supply / demand balance and maximize profitability. One major exception to this trend comes from the NAND memory IC segment where, in spite of a high degree of consolidation, Capex spending is moving ahead with major announced investments by Samsung and SK Hynix. Samsung will be spending $14 billion on its next semiconductor fab, scheduled to be in operation by 2017. Not to be outdone, SK Hynix recently announced its plan to spend $26 billion for two new production facilities in the next decade.
In a recently published summary in the IHS Technology Analyst Insights, Michael Yang and Dee Robinson, lead memory IC analysts for IHS, make the following encouraging observations regarding demand outlook for NAND memory:
- Smartphones have reached saturation in the world’s biggest markets, leaving little room for unit growth in the coming years. However, NAND content per phone is about to take another giant step upward. In 2014, we experienced the migration of the low-end smartphone market, generally equipped with 4GB of NAND, toward 8GB and 16GB. This helped to push the high-end phones to up the ante, with Apple blazing the trail with its 128GB iPhone 6, which was launched late last year. In 2015, Samsung and other brands followed by introducing 32GB as the baseline model. The industry will likely hold onto this new order for a couple of years, but also seeing another possible uplift in 2017 once consumer appetite crescents over.
- Further enthusiasm is rooted in the prospects of solid-state drives (SSDs). While SSD has taken longer than expected in its bid for storage supremacy in client PCs, its potential impact is vast. In the corporate PC segment, it is expected to reach crossover, in terms of SSD versus hard disk drive (HDD) shipments, this year.
While these major demand drivers for memory provide a near-term foundation for continued investment in memory ICs the necessity of investment in innovation to drive the creative new consumer products/solutions that will sustain this demand in the long term is apparent. The major investments required of semiconductor manufacturers dictates that they take earlier and riskier decisions than other players in the electronics value chain. This requires a combination of almost “visionary” perspective and overall optimism to make these investments. The good news is that over the long-term that optimistic vision has proven to be the right strategy even with the sometimes volatile market swings memory suppliers have experienced!
You can subscribe to the detailed data behind this analysis. Information on this research can be found at: IHS Memory IC Research
Dale Ford is the Vice President of Thought Leadership for IHS Technology
Posted on 17 September 2015