The world's largest market, it is time for good domestic storage to appear
The semiconductor industry is on the verge of supply chain rupture and shortage of goods, and demand continues to increase, which also affects the storage market. Memory is the pillar industry of the semiconductor industry, accounting for about 27% of the market value of the entire semiconductor industry. At the same time, due to the early control of the epidemic, the demand for memory in the Chinese market is very strong. For example, the growth rate of eMMC has exceeded the market average, and the annual shipments More than 16 billion or so, accounting for about 38% of the world.
Break from 0 to 1%
According to public statistics, the global memory market will exceed 150 billion U.S. dollars this year, of which NAND Flash will be about 65 billion U.S. dollars, and DRAM will be about 91.1 billion U.S. dollars. Judging from the spot index, the composite price index of the entire NAND Flash and DRAM in the first eight months of this year increased by 12.4% and 18.4%, respectively.
In the future, as the demand for storage in smartphones, PCs, and data centers continues to grow, the global NAND Flash capacity will maintain a high growth rate of about 30% from 2020 to 2025, and the DRAM capacity will grow at a growth rate of about 20%.
From the perspective of the global market structure, in the production of NAND Flash and DRAM, South Korea, the United States, and Japan are the first echelon, while Taiwan is the second echelon, and Mainland China is the newcomer.
Due to the late start, the memory development in mainland China is not balanced, and more attention is paid to packaging and testing, modules and agent sales of foreign brands. However, as an important storage consumer in the world, the market share of Chinese products in the consumer storage market is less than 20%.
Even before 2016, China had very little independent production capacity in the storage industry, and most of it relied on imports. Due to a late start and insufficient technology accumulation, manufacturers in many fields do not trust domestic storage brands. This results in an extremely narrow living space for brand manufacturers in mainland China. In order to expand market share, they can only use low-cost price competition, no more. The resources are invested in the technical field, thus failing to form a virtuous circle. This problem is not the memory market, it is almost a common problem encountered in the domestic semiconductor field.
Especially in the DRAM market, despite the huge market space, the competition is fierce. At the same time, the large capital investment, the higher technical threshold, and the more obvious scale effect have also exacerbated the Matthew effect of the industry. In 2019, Samsung Electronics, SK Hynix, and Micron accounted for more than 95% of the DRAM market.
The over-concentrated market also makes Chinese companies less capable of DRAM chips. Generally speaking, this is why domestic memory prices continue to rise, and it is difficult for consumers to buy a memory stick at an appropriate price.
Fortunately, with the establishment of companies such as Yangtze River Storage and Hefei Changxin in 2016, it has also made up for the gap in the core supply link of the NAND Flash and DRAM markets in the mainland. In addition, domestic storage media has achieved phased breakthroughs. For example, Yangtze Memory's 128-layer 3D NAND, Hefei Changxin DDR4/LPDDR4X and other products have entered the mass production stage.
In the third quarter of 2020, Yangtze River Storage surpassed 1% of the NAND Flash market share, achieving a substantial breakthrough for storage manufacturers in mainland China.
Seizing the opportunity requires excellent products
From the past relying mostly on imports, to the 1% breakthrough in memory localization rate, although there is still a long way to go in the future, the rise of domestic storage is accidental and inevitable.
According to industry insiders, in the past 10 years, the demand for storage in the Chinese market has grown very rapidly, so it can be found that the industrial center of the storage industry, including flash memory, is shifting. The trajectory of this transfer is obvious. The memory industry center has shifted from the United States to Japan and South Korea, and then from Japan and South Korea to Taiwan, China. Not only memory but also other industries can see such a trend.
On the other hand, the technology of the memory industry is developing very rapidly. For example, 10 years ago, flash memory technology did not even have 3D stacking technology, and most of them were 2D, such as 1znm, 1xnm, etc. Another example is the first-generation PCIe 4.0 technology product that was born last year. The maximum transmission speed does not exceed 5000MB/s. Now PCIe 4.0 has gradually evolved to the 2.0 stage, and the maximum transmission performance has reached 7000MB/s. With new technology, it means that there are new opportunities, which will also allow more companies to enter the track.
At the same time, the domestic industrial environment is also encouraging the rapid development of semiconductors, especially in the era of information explosion, where a lot of data needs to be stored. This is very imaginative for the memory stock market or the incremental market, which is why many people are willing to enter this industry.
An executive of a certain company in the industry once said that if you take a path and find a lot of people, it may indicate that you are on the right path. If there are few people on this path, you may suspect that you have chosen the wrong direction.
However, in the past, domestic storage products were always synonymous with low prices, and many manufacturers kept compressing their own costs in order to gain market share as soon as possible. But now, with the trend of more and more data, users also prefer large-capacity, high-quality products, which has begun to force manufacturers to make better-quality and more competitive solutions.
An executive of a memory chip manufacturer said that the most important thing for domestic manufacturers to make their own achievements is to give priority to products. Whether it is product performance or the pace of product launches, they must maintain certain advantages, especially nowadays localization Driven by the wave, many companies are willing to give domestic manufacturers a chance. If the product is really good, then they will seize this opportunity.
In addition, as a local company, it can better serve customers, and service is also a strong point in East Asian culture. Everyone has the same culture and it is easier to understand the true needs of customers. In the past, many companies did not care about the customer's software or mass production, but now, they can be packaged as additional services and pushed to users in a turnkey way.
Domestic manufacturers catching up with the times
Although the concentration of the memory industry is very high, such as in the DRAM market, it is almost monopolized by the first three companies, but because of the late start of domestic companies, they need more sincere cooperation, especially in the domestic Yangtze River Storage, Hefei Changxin and other outstanding companies. After the emergence of many domestic storage vendors, more companies are willing to cooperate with domestic vendors.
For example, a storage controller manufacturer will actively participate in the discussion during the definition phase of YMTC's production of next-generation flash memory particles, formulate the specifications for the next-generation product definition, and add some of its own requirements. At the same time, it may also participate in the testing of engineering samples in the early stage before the product launch, to help the company do some verification and feedback problems.
And the company will sign a long-term cooperation agreement with the original head storage manufacturer in China, and will require the manufacturer to guarantee a sufficient supply of products, so no matter how tight the original manufacturer is, the supply in the agreement will be guaranteed. At the same time, the company's main control chip is also produced independently, so it is a huge advantage this year.
For example, the shortage of SSD products is largely due to the lack of the main control chip, and the company's main control chip is produced by itself, so the entire consumption is controllable and sufficient external supply can be guaranteed. And the main control chip is usually placed 12 months in advance to ensure a stable supply.
An executive of another domestic memory chip design company also said that he was very pleased to see the emergence of domestic memory original factories, and he has maintained this good cooperative relationship with all small original factories.
And support for domestic storage OEMs also brings more market opportunities for some enterprise users, because these domestic storage OEMs' products will be used in various domestic scenarios. Obviously, this cooperation model is a win-win situation.
Of course, the current challenges for domestic storage vendors are still huge. One problem is how to gain the trust of customers. Now in the wave of domestic substitution, many manufacturers are also willing to give domestic storage companies a chance, but if they only make a choice on price, then when the supply chain returns to normal, the competitiveness of these companies will be worrying. Therefore, we still need to return to the product itself and improve the quality of the product through investment in research and development.
Some industry executives said that the current domestic desktop storage vendors have reached the same level as international vendors, and at the same time, enterprise-level and industrial-level products are also catching up quickly. From the overall trend, China's storage in the next 2-5 years Several local manufacturers will come to the fore in the market. Even if the dividends of domestic substitution gradually disappear, domestic storage products will also occupy a better market position.