Events
Due to the contamination of materials used in the manufacturing process, the joint venture plant of Kaixia and Western data in Japan has significantly reduced production, which will significantly drag down the global production of NAND and DRAM chips. It is understood that the flash memory capacity of Kaixia and Western data accounts for more than 32% of the global NAND chip market, which is close to the leading Samsung. According to wind data, the spot prices of NAND and DRAM are rising. The average spot price of nand64g has risen to $3.68 from $2.88 in early January, and the spot price of DRAM 16g has risen to $7.87 from $7.45 in early January. It is expected that the price will still rise.
Key investment points
Kaixia’s Japanese factory was polluted and reduced production, and the spot price of storage chips rose
In February, the two nandflash joint venture factories of Kaixia and Western data in Siri City, Japan and listed in the north had a raw material pollution accident, which affected the production. The statement of Western data and Kaixia did not give an estimate of when to resume production. Usually, it takes three months for a chip to go from a silicon wafer to a finished component that can be used in electronic equipment. At present, the spot prices of storage chips are rising, and trendforce also adjusted the previous forecast. In the second quarter of 2022, it was adjusted from the original expected decline of 5% to 10% to an increase of 5% to 10%, and in the third quarter, it was adjusted from the original flat to an increase of 3% to 8%. The shutdown of two major factories in Japan gives Chinese storage chip enterprises the opportunity to expand market share.
With the general trend of “three modernizations” of automobiles, the market demand for on-board memory chips has accelerated
In recent years, new energy vehicle industry policies have emerged frequently, and the trend of vehicle electronization, electrification and intelligence is unstoppable. With the gradual increase of new energy production, the automotive electronics market will continue to improve. According to IHS statistics, the global automotive electronics market in 2016 was US $116 billion, and it is expected to reach US $160.2 billion in 2022, with an average annual compound growth rate of 5.51%. Among them, the market scale of ADAS sector was US $7.088 billion in 2016 and is expected to reach US $21.447 billion in 2022. Adas system includes driving record, intelligent navigation, panoramic image, lane offset warning and other functions. With the demand driven by supporting devices such as tachograph, the rapid growth of its market scale will increase the market scale of memory for motor vehicles. According to Gartner’s data, the NAND flash storage consumption in global ADAS in 2019 was 220 million GB. Due to the rapid development of intelligent vehicles, the NAND flash storage consumption in global ADAS is expected to reach 4.15 billion GB by 2024, with a compound growth rate of 79.8% from 2019 to 2024.
With the vigorous development of digital economy, the “digital computing in the East and digital computing in the west” has brought new growth of storage chips
Driven by the “counting from east to west” and the transformation of digital economy, memory chips are growing into the most prosperous sub track in the semiconductor industry. With the rapid development of domestic chip, the “digital storage center” can not be considered as the driving force for the rapid development of “digital storage center”, which will help the development of “digital storage center”. The report of the white paper on China’s digital economy development (2021) shows that China’s digital economy will continue to flourish in 2020, reaching 39.2 trillion yuan, an increase of 3.3 trillion yuan over last year, accounting for 38.6% of GDP, an increase of 2.4 percentage points year-on-year, effectively supporting epidemic prevention and control and economic and social development. The China Business Industry Research Institute predicts that the added value of China’s digital economy will reach 48.9 trillion yuan in 2022. The digital economy gives birth to a large number of data storage needs, which will drive the development of the storage industry in the long run.
Industry rating and investment strategy
With the rise of emerging fields such as automotive electronics, 5g communication, digital economy and wearable, the demand for memory chips will be more vigorous. Recently, the production capacity of the joint venture plant of Kaixia and Western Digital in Japan has been affected, and it is expected that the storage chip market will continue to strengthen, and the mismatch cycle of this round of supply and demand will exceed expectations. We recommend paying attention to the excellent local storage chip companies Gigadevice Semiconductor (Beijing) Inc(603986) ( Gigadevice Semiconductor (Beijing) Inc(603986) ), Ingenic Semiconductor Co.Ltd(300223) ( Ingenic Semiconductor Co.Ltd(300223) ), Dongxin shares (688110). There is a huge demand in downstream China, However, Chinese companies on the supply side account for a relatively small proportion. In the long run, local companies have significant growth and relatively large performance flexibility. Local companies are expected to continue to increase market share by virtue of excellent product power, management efficiency and service advantages. With the development of digital economy, storage ushered in long-term benefits. We rated the storage chip industry as “overweight”.
Risk tips
The economic boom is down, Japanese enterprises resume operation beyond expectations, the progress of raised investment projects does not meet expectations, the risk of exchange rate fluctuations and sharp fluctuations in raw material prices. Focus on the company and profit forecast
