The Zhitong Finance App learned that Galaxy Securities released a research report saying that the memory chip circuit is a high-growth and strong cycle industry. The current time is a new starting point for the next cycle of the memory chip circuit. Against the backdrop of AI/localization and demand recovery compounded by the digital economy's continuous rise in demand for memory, it is optimistic about investment opportunities for listed companies related to the domestic storage industry chain. Focus on memory chip design company Zhaoyi Innovation (603986.SH), Beijing Junzheng (300223.SZ), Lanqi Technology (688008.SH), etc.; module manufacturers focus on Jiang Bolong (301308.SZ), Demingli (001309.SZ), Lanco Technology (300042.SZ), etc., and focus on related industry chain sealing and testing manufacturers Shenzhen Technology (000021.SZ), Changdian Technology (600584.SH), Tongfu Microelectronics (002156.SZ), etc.
Galaxy Securities's views are as follows:
The storage industry has a market size of over 100 billion dollars and is the main market segment of the semiconductor industry. DRAM and NAND are currently mainstream.
In 22/21/20, the global storage market size was 1392/1534/117.5 billion US dollars respectively, accounting for 24%/28%/27% of the semiconductor scale. It is the second largest segment in the world. Among them, DRAM and NAND Flash are the most mainstream semiconductor memories, accounting for more than 95% of the market size. The development direction of DRAM technology is gradually moving towards high transmission rates and low power consumption. At the technology node, the original DRAM factory is gradually evolving to physical limits; the main trend of NAND storage is evolving towards high-density storage and 3D stacking. In terms of the number of stacking layers, Samsung expects to produce more than 300 layers of 9th-generation V-NAND flash memory in 2024, and the number of stacking layers continues to break through.
Looking at memory chips, 3-4 years is about a complete cycle, and AI demand is creating the starting point for the industry's fifth cycle.
Since 2000, the storage industry cycle has shown remarkable results. Innovation in consumer electronics can rapidly increase the overall demand for memory chips. Taking 2000, 2009, and 2017 as examples, they are three important window periods for large-scale investment in the Internet era, mobile Internet, and cloud computing. However, the PC iteration and mobile phone switching cycle in 2004 and 2020 caused the market rebound to be weak. At the same time, supply-side contraction and price increases often lag behind the rapid explosion of demand in various cycles, so the layout at the bottom of the price cycle can gain greater flexibility. Judging from the current window period, demand for AI servers, AI PCs, AMobile, etc. is rapidly increasing, and the storage and computing power of the cloud and edge terminals is increasing. Currently, the starting point of the industry's fifth cycle has been confirmed.
The supply and demand pattern has gradually improved, and the value of memory chips has steadily increased.
Manufacturers such as 23H1 Samsung, SK Hynix, Micron, Western Digital, and Kioxia have announced a reduction in production capacity, and manufacturers have reduced capital expenses related to the storage business. The production reduction plans of all major manufacturers are driving the storage cycle ahead of schedule. Under the premise that storage demand continues to expand, the price of memory chips will rise and enter the recovery cycle ahead of schedule. Supply-side production cuts continue, and the supply gap is expected to arrive in 24Q2. According to current estimates, since 2023, the capacity utilization rate and capital expenditure of overseas manufacturers have been significantly reduced, and the value of memory chips has steadily increased.
AI servers, AI PCs, and AI mobile continue to expand, and the storage market has ushered in new development opportunities.
The development of PC-side AI is driven by software and hardware collaboration. In 2022, ChatGPT began a wave of AI models, and AI application scenarios are becoming more and more rich. The development of AI PCs is expanding comprehensively towards “computing+storage+sensing”. As computing and sensing performance improve, storage requirements are also growing, especially the demand for memory capacity. Generative AI models, such as the LLamA model, have high memory requirements. For example, the FP16 version of the 7 billion parameter Llama model is about 14GB in size, while existing mobile devices usually have less than 10GB of memory. In the server sector, computing power chips have led to a rapid increase in demand for HBM. According to TrendForce data, high-end AI server GPUs generally use HBM. Global demand for HBM is expected to increase by nearly 60% in 2023 to 290 million GB, and another 30% in 2024. Micron launched the latest HBM3 Gen 2 memory sample, with a speed of 1.2 Tb/s, 8 high-stack 24GB capacity, and 1β manufacturing technology. Compared to the HBM2E, the performance per watt is 2.5 times better.
Risk warning: risk of downstream market demand falling short of expectations; risk of developing new storage technology falling short of expectations; risk of downstream customer expansion falling short of expectations; risk of IC designers' upstream fab price fluctuations;