Archive

Archive for the ‘Nam Hyung Kim’ Category

Reports of memory market recovery greatly exaggerated: iSuppli

April 24, 2009 Comments off

EL SEGUNDO, USA: Concerned about their image as they face the specter of bankruptcy, many memory chip suppliers are attempting to paint a more optimistic picture of the business by talking up a potential market recovery.

However, while overall memory chip prices are expected to stabilize during the remaining quarters of 2009, iSuppli Corp. believes a true recovery in demand and profitability is not imminent.

After a 14.3 percent sequential decline in global revenue in the first quarter DRAM and NAND flash, the market for these products will grow throughout the rest of the year. Combined DRAM and NAND revenue will rise by 3.6 percent in the second quarter, and surge by 21.9 percent and 17.5 percent in the third and fourth quarters respectively.

“While this growth may spur some optimism among memory suppliers, the oversupply situation will continue to be acute,” said Nam Hyung Kim, director and chief analyst for memory ICs and storage at iSuppli.

“For example shipments of DRAM in the equivalent of the 1Gbit density will exceeded demand by an average of 14 percent during the first three quarters of 2009. This will prevent a strong price recovery, which will be required to achieve profitability for most memory suppliers.”

Painful oversupply
Due to a long-lasting glut of DRAM, the imbalance between supply and demand is too great for this market to recover to profitability any time soon.

“Even if all of the Taiwanese DRAM suppliers idled all their fabs, which equates to 25 percent of global DRAM megabit production, the market would remain in a state of oversupply,” Kim said. “This illustrates that the current oversupply is much more severe than many suppliers believe—or hope.”

Besides cutting capacity, which suppliers have already been doing, they presently have few options other than waiting for a fundamental demand recovery. iSuppli believes that another round of production cuts will take place in the second quarter, which will positively impact suppliers’ balance sheets late this year or early in 2010 at the earliest.

DRAM prices now amount to only one-third-level of Taiwanese suppliers’ cash costs. Unless prices increase by more than 200 percent, cash losses will persist for these Taiwanese suppliers.

While average megabit pricing for DRAM will rise during every quarter of 2009, it will not be even remotely enough to allow suppliers to generate profits in this industry. The industry needs a dramatic price recovery of a few hundred percentage points to make any kind of impact.

iSuppli is maintaining its “negative” rating of near-term market conditions for DRAM suppliers.

Confusing picture in NAND
The picture is a little more complicated in the NAND flash memory market.

Pricing for NAND since January has been better than iSuppli had expected. However, iSuppli believes this doesn’t signal a real market recovery.

Most NAND flash makers are continuing to lose money. The leading supplier, Samsung Electronics Co. Ltd., seems to be enjoying the current NAND price rally as prices have almost reached the company’s break-even costs. However, all the other NAND suppliers still are losing money.

“While the NAND market in the past has been able to achieve strong growth and solid pricing solely based on orders from Apple Computer Inc. for its popular iPod and iPhone products, this situation is not likely to recur in the future,” Kim said. “Even if Apple’s order surge, and it books most of Samsung’s capacity, it would require a commensurate increase in demand to other suppliers to generate a fundamental recovery in demand.”

However, iSuppli has not detected any substantial increase in orders from Apple to other suppliers. Furthermore, Apple’s orders, according to press reports, are not sufficient to positively impact the market as a whole.

It doesn’t make sense for major NAND suppliers Toshiba Corp. and Hynix Semiconductor Inc. to further decrease their production if there is a real fundamental market recovery. This means supply will continue to exceed demand and pricing will not rise enough to allow the NAND market as a whole to achieve profitability.

The NAND flash market is in a better situation than DRAM at least. However, the market remains challenging because fundamental demand conditions in the consumer electronics market have not improved due to the global recession.

One of the reasons why the price rally occurred is that inventory levels have been reduced in the channel and re-stocking activity has been progressing. Overall, memory suppliers will begin to announce their earnings shortly and iSuppli will remain cautious about the NAND flash market until we detect solid evidence, not just speculation, of a recovery.

iSuppli is remaining cautious about the near term rating of NAND market, holding its negative view for now, before considering upgrading it to neutral.

“Production cuts undoubtedly will have a positive impact on the market in the future. However, it’s too early for to celebrate. iSuppli believes the surge in optimism is premature. Supplier must be rational and watch the current market conditions carefully to avoid jumping to conclusions too quickly,” Kim concluded.

Memory market to witness another negative sales growth in 2009

December 7, 2008 Comments off

This is a continuation from my previous blog on the outlook for the global semiconductor industry, and iSuppli’s ranking of the Top 20 global semiconductor companies.

Thanks to Jon Cassell at iSuppli, I also got into a conversation with Nam Hyung Kim, Director & Chief Analyst, iSuppli. Kim touched upon the outlook for DRAM and the memory market as a whole.

Further analyzing iSuppli’s top 20 rankings, among the leading memory makers, Hynix has performed the worst. On this aspect, Kim says that DRAM sales is likely to decline by 20 percent in 2008. Thus, Hynix’s performance is not far from overall challenging status considering it also scaled NAND flash business back dramatically.

On another note, Qimonda is also among the strugglers, and there have been whispers about its possible bankruptcy. However, iSuppli did not comment on this topic.

So, how much longer will it take before the memory market can come out of its current woes? Kim adds: “The memory industry inevitably will experience another negative sales growth in 2009. However, the rate of sales decline will be much lower than that of 2008.

“The year 2009 will be the third year of the memory market downturn. Therefore, supply growth reduction will take place fast, resulting in lower price drop compared to 2008.”

Finally, what’s the way forward for DRAM, NOR and SRAM? Kim asserts that iSuppli expect the following sales growth in 2009 (preliminary):
* DRAM: single digit percentage sales decline; and
* NAND, NOR, SRAM will experience mid to high teens sales decline.

On possible Samsung-SanDisk deal; AMD’s fab-lite path

September 6, 2008 Comments off

Last week, the global semiconductor industry has been hearing and reading about two big speculative stories:

a) A possible acquisition of SanDisk by Samsung, and
b) A possible chance of AMD taking the fab-lite route.

First on Samsung’s buyout (possible) of SanDisk! There have been rumors of a possibility of Samsung acquiring SanDisk. While it is still a possibility, it also leads to several interesting questions!

Should this deal happen, what will be the possible implications for the memory market? Will this also lead to a possible easing off on the pricing pressures on the memory supply chain? And well, what happens to the Toshiba-SanDisk alliance?

A couple of weeks back, iSuppli, had highlighted how Micron had managed to buck the weak NAND market conditions, and was closing the gap with Hynix in Q2, and that NAND recovery was likely only by H2-2009.

I managed to catch up again Nam Hyung Kim, Director & Chief Analyst, iSuppli Corp., and quizzed him on the possible acquisition of SanDisk by Samsung.

A caution: Remember, all of this is merely based on speculation!

On the possibility of Samsung’s takeover of SanDisk, he says: “Samsung at least said that they consider it. Thus, it is a possible deal. But who knows!”

Kim is more forthright on the implications for the memory market, should this deal happen, and I tend to agree with him.

Consolidation inevitable; no impact on prices
The chief analyst quips: “The NAND flash market is still premature and there are too many players in flash cards, USB Flash drives, SSD, etc. The industry consolidation should be inevitable in future.”

So, will this possible buyout at least ease some pricing pressures on memory supply chain? “I don’t expect this deal to impact the prices. Prices will depend on suppliers’ capacity plans. In the memory industry, the consolidation has never impacted the prices in a long run. (maybe, just a short-term impact). As you know, Micron acquired Lexar a few years ago, but no impact,” he adds.

Is there any possibility of SanDisk delaying its production ramps and investments at two of its fabs? And, what will happen should it do so?

Nam says: “SanDisk has already said that they would delay its investment and capacity plan given difficult market condition. This is a positive sign to the market as we expect slower supply growth than expected in future. However, in a long run, consolidation won’t impact the market up and down.”

Negative impact likely for Toshiba?
Lastly, what happens to the SanDisk-Toshiba alliance, should the Samsung buyout of SanDisk does happen?

Nam adds: “It is negative to Toshiba. The company [Toshiba] not only loses its technology partner, but also loses its investment partner. It should be burden for Toshiba to keep investing themselves to grow its business.”

Well, in SEMI’s Fab Forecast Report, there is mention of how Toshiba and SanDisk are among the big spenders in fabs, in Japan. Considering that Japanese semiconductor manufacturers are more cautious, it would be interesting to see how this deal, should it happen, affects the Toshiba-SanDisk alliance.

Now, AMD goes fab-lite?
While on fabs, this brings me to the other big story of last week — of AMD going the fab-lite route, possibly!

Magma’s Rajeev Madhavan had commented some time back that fab-lite is actually good for EDA. It means more design productivity. Leading firms such as TI, NVIDIA, Broadcom, etc., are Magma’s customers.

Late last year, Anil Gupta, MD, India Operations, ARM, had also commented on some other firms going fab-lite! Gupta pointed out Infineon, NXP, etc., had announced Fab-Lite strategies. Even Texas Instruments was moving to a Fab-Lite strategy. “IDMs are going to be the fabless units of today and tomorrow,” he added.

So much for those who’ve taken the fab-lite route, and industry endorsements.

On the fab-lite subject, iSuppli’s Kim will not speculate whether AMD would actually break up into into two entities: design and manufacturing, and also prefers to wait and watch.

How does fab-lite actually benefit? He comments: “Fab-lite has not been working well in the memory industry, which requires very tight control. It works, IF two companies (an IDM and a foundry) work very closely. For example, the industry leader, Samsung, produces all of the memory alone without any foundry relationship.”

Watch this space, folks!

NAND update: Market likely to recover in H2-09

August 20, 2008 Comments off

iSuppli’s recently published a report on the current NAND market conditions, which highlighted that Micron had managed to buck the weak NAND market conditions, and was actually closing the gap with Hynix in Q2 2008.

To find out more about the global NAND Flash market scenario, I managed to discuss the health of the NAND market conditions, performance of certain companies, and the possible impact of SSDs on the NAND market, in depth with Nam Hyung Kim, Director & Chief Analyst, Memory, for the market research firm, iSuppli Corp., El Segundo, Calif., USA.

I would also like to thank Jonathan Cassell, Editorial Director and Manager, Public Relations, iSuppli, for helping me out a lot! Without his assistance, this would not have been possible! Many thanks.

Now on to iSuppli and the NAND update. First up, NAND continues to be weak. How much longer, before we can see some sort of recovery?

Nam Hyung Kim says that the NAND market conditions will depend on the suppliers’ manufacturing capacity plans and on the global economy. The health of the NAND flash market is largely determined by consumer spending, since more than 85 percent of demand for the memory is generated by consumer-electronics-type products like digital still cameras, mobile handsets and flash storage devices.

“Market conditions won’t improve much this quarter. However, iSuppli Corp. does expect NAND prices to stabilize to some degree during the fourth quarter due to a slowdown in certain suppliers’ capacity expansion plans. A major recovery is expected in the second half of 2009,” he says.

So, what’s the reason for Micron to have done better in a weak market scenario?

According to Kim, Micron is doing well based on market share and sales growth—but not in terms of profitability. Micron has been expanding its market share by ramping up production aggressively. The company joined the flash market later than its competitors and is trying to catch up. In the memory world, a supplier needs to have critical scale. Without scale, the company won’t be competitive. Thus, Micron is increasing its scale—i.e., its volume—to be more like the size of the top-three suppliers at this moment.

If Micron has been aggressive, why haven’t the others? Possibly, the others could have also planned or migrate to 34nm! However, except for Samsung, all of the suppliers are losing money in their NAND businesses now.

“Each supplier has a different product mix and strategy, so being aggressive during tough times is not a suitable approach for certain firms. Others also plan to migrate their process to sub 40 nanometers. However, Micron will be the first one that produces 34nm products this year,” adds Kim.

iSuppli has now cut its 2008 NAND annual flash revenue growth forecast from 9 percent to virtually zero. When the slowdown had already been predicted during the end of last year, what was the need to cut predictions?

Kim agrees that this is indeed the second cut this year. “We cut our forecast early this year to 9 percent, which was a dramatic reduction from the more than 20 percent growth forecast previously. I believe, we were the first research firm that cut the market growth dramatically this year, followed by other research firms.

“The NAND flash market is relatively new and has lots of growth potential. However, oversupply issues, along with weak consumer spending, prompted us to cut the growth outlook further this time.”

Coming to the subject of solid-state drives, what are the chances of SSDs in helping with a turnaround in the NAND market? Or, are they (SSDs) hyped?

“I should not say SSDs (solid-state drives) are overhyped,” adds Kim. “There are lots of issues that the industry must overcome when bringing SSD technology to the real world. Hard disk drives (HDDs) have been used in PCs for more than 30 years, so the movement to SSD technology won’t be very rapid.”

iSuppli had predicted that SSDs would not impact the market this year or next year. The real prime time for SSD adoption will be in 2010. There are many optimization problems associated with SSDs, which is typical at an early stage in the technology industry. By 2011, iSuppli believes SSDs will be the number one NAND flash market driver in terms of dollar value.

iSuppli also believes that the global NAND flash per-megabit average selling price (ASP) will decline by about 60 percent in 2008, compared to its previous forecast of a 56 percent decline. On quizzing, he says, “As mentioned, the NAND flash market, even in third-quarter, holiday season, won’t have a turn around, which brings the ASP down to the 60 percent level.”

When NAND is taken out of the equation, how does the semiconductor industry look like? iSuppli believes that the 2009 global semiconductor market growth will be higher than that of this year. The semiconductor market is also cyclical, so it will be impacted by global GDP growth this year.

Finally, how does the research firm forsee Nymonyx (there was an article saying it will conquer NAND Flash)?

According to Kim, Numonyx is still a major NOR flash supplier with limited NAND flash market share. Unlike Intel, Numonyx’s focus is on mobile applications. Its joint-venture partner, Hynix, is scaling down its NAND flash production at this time and is focusing on DRAM production.

iSuppli doesn’t expect Numonyx to be a formidable competitor in the NAND flash memory market during the near term.

%d bloggers like this: