Since last year, the global demand for consumer electronics has continued to weaken, resulting in a slow recovery in the demand for memory chips, which has made many memory chip companies suffer from "unable to sell". For example, Samsung, the chip leader, made more than eighty percent of its profits last year. In addition to the fact that old chips cannot be sold, the memory chip market is also undergoing earth-shaking changes. Because of the advent of the AI era, in order to cooperate with AI servers with extremely high computing power requirements, old memory chips are no longer the darling of customers.
The cold winter of consumer electronics
Preliminary data released by South Korea's Samsung Electronics Co. on January 9 showed that the company's operating profit in 2023 was 654 trillion won (about 35.6 billion yuan), down 84 percent year-on-year92%。On an annual basis, this is 6The lowest level since 03 trillion won. The data also shows that Samsung Electronics sold 258 last year16 trillion won, down 1458%。
This is believed to be due to the sluggish performance of semiconductors. Zhang Xiaorong, president of the Deep Science and Technology Research Institute, introduced that the main income of Samsung's semiconductor business is memory chips, that is, storage business. "Many people don't know that before Samsung made mobile phones, its core business was to produce memory chips. Xiang Ligang, a communications expert, also said that DRAM and NAND business have become the core pillars of Samsung Semiconductor. Even after Samsung's mobile phones gradually disappear from the Chinese market, Samsung can still firmly occupy the throne of the world's leading Internet company with the income of its storage business.
However, with the advent of the epidemic, chip buyers in the global market have suspended orders and accelerated the consumption of existing inventory. Under the adjustment of supply and demand, not only memory chips could not be sold for a time, resulting in an extremely serious inventory backlog. Zhang Xiaorong said. According to the data, as of the end of June 2023, Samsung's semiconductor inventory has exceeded 180 billion yuan.
In addition to the fact that old chips cannot be sold, the memory chip market is also undergoing earth-shaking changes. With the advent of the AI era, generative large models have exploded, and DRAM and NAND memory chips have been phased out one after another in order to match AI servers with extremely high computing power requirements, and new memory chips (HBM) have become the mainstream.
According to public information, HBM chips are stacked with GPUs to achieve a large-capacity, high-width DDR combined array, which allows larger models and more parameters to stay closer to the core computing, thereby reducing the latency caused by memory and storage solutions.
HBM chips have now become the standard configuration of large AI models, and Samsung's old rival SK hynix has more than 50% of the market share. And cooperate with NVIDIA to jointly develop AI chips such as H100 and H200 chips, and exclusively occupy 90% of the high-end market share.
Demand has improved
In October last year, Samsung said that the long-term sluggish memory chip market will gradually be driven by the boom in artificial intelligence development in 2024. Samsung executives said at the time that memory chips** should start to come out of the trough around the second half of 2023.
However, this latest earnings guidance suggests that the situation is not as rosy as Samsung had previously anticipated. Tom Kang, head of research at Counterpoint Technology Market Research, said: "I think this shows that the pace is slower than all of us think......*Not as fast and not as strong in some industries. ”
For comparison, in December, Micron Technology, Samsung's main competitor in the semiconductor field, announced a better-than-expected revenue outlook, indicating a recovery in demand for data centers, making up for the lukewarm demand for computers and mobile devices.
However, the earnings report is not all bad news. On a quarterly basis, the company's operating profit in the four quarters of last year showed a sequential growth momentum. Among them, the operating profit in the fourth quarter reached 28 trillion won, the highest for the year, but down 35% year-on-year. In addition, sales for the quarter were 67 trillion won.
According to calculations, Samsung Electronics' quarterly operating profit increased for three consecutive quarters, with 640 billion won in the first quarter of last year, 670 billion won in the second quarter, and 244 trillion won. According to the report, the market believes that this trend is an improvement in performance due to the improvement of semiconductor demand and the depletion of memory inventory.
Analysts at Japan's Daiwa Capital Markets Co., Ltd. wrote in a research report released on January 4: "Boosted by the reduction of production by **business and the recovery of demand for mobile phones and personal computers, we estimate that memory chips will **start in the fourth quarter of 2023**." IDC Research believes that memory chips have been around since the beginning of November last year, mainly due to strict control by manufacturers and output.
In a research report released by IDC on December 21 last year, the widespread demand for artificial intelligence in applications will promote the overall recovery of the chip market in 2024, and "the semiconductor ** chain, including design, manufacturing, packaging and testing, will bid farewell to the downward trend in 2023."
Start the big model
Samsung's current goal is to catch up with its competitors in the field of HBM chips. Sources recently revealed that Nvidia has made large advances to SK hynix and Micron to ensure that HBM3E** is safe. SK hynix has already planned to increase its production capacity in this field by 25 times.
However, Samsung is still facing the pursuit of its rivals. According to reports, in order to ensure the stability of HBM**, Nvidia has paid hundreds of millions of dollars in advances to SK hynix and Micron. Micron CEO Sanjay Mehrotra has revealed that the company is in the "final validation phase for NVIDIA's next-generation AI accelerator, HBM3E."
According to the agency**, SK hynix's market share is expected to increase to 53% in 2023, while Samsung and Micron will have market shares of 38% and 9%, respectively. Shenwan Hongyuan said that the memory chip cycle is expected to usher in a recovery, and AI servers will detonate the demand for new HBM storage.
In addition to chip upgrades, Samsung has also followed the footsteps of many mobile phone brands and started to develop its own generative AI. At the Samsung AI Forum 2023, Samsung officially announced its self-developed generative AI product Gauss.
According to reports, the three components of Gauss have their own uses, among them, Samsung Gauss Language is a generative language model that can use AI to write emails, summarize documents, and translate content;Samsung Gauss Code provides AI capabilities that can write and generate test casesSamsung Gauss Image is a generative image model that can generate and edit creative images.
Zhang Xiaorong said that as the former leader in the storage field, Samsung has suffered a lot of setbacks in the AI era, with a large backlog of DRAM and NAND memory chips that are the pillars of the brand, and high value-added products such as HBM (high-bandwidth memory) closely related to AI have been surpassed by old rivals, and the transformation is difficult.
Xiang Ligang said that Samsung, which walks on two legs, can only bet on the mobile phone business after breaking one leg. Although it has failed in the Chinese mobile phone market, Samsung, which has always been strong in the European and South American markets, still has a chance to turn around.