Storage Industry Under Dual External Pressure

In the face of the sudden epidemic and the international environmental impact, the storage industry, which was originally on the upward cycle, inevitably faced new challenges.

A major market that supports the storage industry, mobile phones, has not been able to revive as quickly as possible, and the server market has emerged with the outbreak of various scenarios of online demand.

Recently, Gou Jiazhang, general manager of Hui Rong technology, told reporters on twenty-first Century economic report that the industry predicted that this year would be a year of rapid growth of storage industry, but the epidemic caused a delay. At present, the second quarter will inevitably decline, the industry will look forward to the third quarter after the recovery of the market segments, the market is expected to be relatively stable in the second half of the year, of course, there may be a slight decline.

However, the specific demand itself is also cyclical. In the coming year, the adjustment of supply and demand and the normalization of post epidemic era will be a topic that the storage industry needs to keep facing.

Chi Bang consultancy believes that the US government's recent initiatives will not have a significant impact on the storage industry in the short term, and will continue to take into account the gradual consumption of cell phone memory inventory, which remains to be seen in the near future.

Epidemic test storage industry second half year

At the end of last year, when the forecast was made, the market in front of the storage industry chain was originally a good "big cycle" interval until the new crown outbreak suddenly broke out and gradually spread all over the world.

Therefore, from the perspective of the deferred effect of the epidemic, in fact, the business performance of storage factories has not been seriously affected in the first quarter. The quarterly report of NasdaqGS:SIMO, a storage and control plant in Taiwan, China, showed that the revenue of the company was $13 thousand and 300 during the period, up 49% from the same period last year, and the gross profit margin was 48.2%.

The PHISON (TWSE:8299), which is the same as the main storage plant, even has multiple "new high" statements. The consolidated revenue during the period is NT $12 billion 866 million, a record high in the single quarter, up 38% over the same period. The gross profit margin has increased gradually to 30.04% of the historical high level, and the net profit after tax has also set a new high.

Since then, the global market has opened blockade measures, which really has a substantial impact on the storage industry in the second quarter. The smart phone market, which hosts one of the main needs of the storage industry, has seen a dramatic decline. According to Canalys statistics, in the first quarter of this year, the shipment of the global intelligent machine market dropped by 13%, and the shipments of China's intelligent machine market dropped by 18%.

This is not the case. The surge in online application scenarios during the closure period has brought about a burst of storage requirements in the server scenario.

Gou Jiazhang told the twenty-first Century business news reporter that the demand for data center is still strong until July, but it is uncertain whether it will last through the third quarter.

"But I think the demand for data center will slow down in the second half of the year. Because the demand for data centers is also cyclical, which is about two years' slowdown and a strong year. " He continued that the overall performance in the second half of this year depends on whether the demand for major consumer markets such as smartphones and laptops and tablets is strong. "Mobile phones will play a very important role."

He further pointed out that in fact, the normal demand for storage will exist, but the demand that can bring a great change to the storage industry will be cyclical. "So when the slowdown in demand for data centers in the third quarter will occur and whether the demand for smart phones can be restored as scheduled, this determines the price performance of NAND Flash in the three quarter. But it is predicted that the third quarter will remain stable, or there may be a slight decline, and the fourth quarter will be hard to say.

Gou Jiazhang frankly said that in the first quarter of this year, the achievements of Hui Rong technology in mainland China were indeed affected, but fortunately it was only 10% lower than the original forecast.

"The development of the epidemic mainly affects retail channels." He continued to say that the channel demand has slowed down in the second quarter since the beginning of the first quarter of the year, and this effect may continue into the third quarter. "I think we can see that in the two quarter, when we publish our earnings reports, this will be a very large Gap."

The industry generally believes that from the first resumption of the Chinese market, the demand for mobile phone consumption has rebounded in April, but whether the data in May is still sustainable will be an important observation standard, which can be deduced to the global recovery logic.

In addition to the epidemic, there are also new variables brought about by the international macro environment in the near future. This will affect the healthy development of the storage industry and will be a trend for the semiconductor industry to observe.

In this regard, Chi Bang consulting pointed out that the product design of all the memory products and other related solutions of the original memory products were not specifically developed for HUAWEI and its related companies, so the shipment of HUAWEI and other companies was not restricted by the ban. As for U.S. memory providers, Mei Guang and Intel, they also can ship HUAWEI as usual because they have already obtained special shipping permits.

However, it is worth noting that the US government's regulatory strength for HUAWEI or the overall Chinese brand will continue to increase, so the subsequent impact on the supply or demand side of the storage needs to be continuously observed and evaluated.

Ka Akinori said, in fact, the global semiconductor is a big ecological chain, each market needs each other, and can help each other and grow together. "We also believe that most businesses are doing global business, and we will not change our relationship with Chinese customers and our relationship with HUAWEI," he said.

Active preparation in the era of 5G

Under the double environmental impact of the new crown epidemic and Sino US trade frictions, the dominant factor in the short term will be the adjustment of the income sources of the storage industry chain.

Gou Jiazhang told the twenty-first Century economic news reporter: "we may have different revenues in different times, but the overall progress of development and the layout of personnel have not changed."

Specifically, the epidemic has a steady impact on the demand for PC and OEM for smart phones. Although the automobile industry will be affected, the demand is even strong in some special automotive industry applications. This will support the fundamentals of the whole economy and support the sustainable growth of the storage industry.

It is reported that at present, the proportion of Hui Rong science and technology in the field of OEM is larger than that of the channel. "So we will not change the development of our controller as the terminal market changes, but rather a little longer." In addition, as the main manufacturer of global (storage) controllers, we have to maintain the continuous development of technology.

He said that at present, Hui Rong has shipped a lot of UFS 2.1 storage controller for high-end memory requirements of mobile phones, and UFS 3.1 has begun shipping a small amount to the global manufacturers for testing. Company planning will enter 7 nanometer technology in 2022, which requires a lot of manpower to invest in IP development and structural adjustment.

In fact, during the epidemic period, the main manufacturers of storage industry are continuing to research and development. Recently, the Yangtze River storage has been announced for three years, achieving a leap from 32 to 128 tier stacking technology, and long Xin storage already has 19 nanometer DDR4 products.

"We can see that the future competition of storage industry is still fierce, and the market demand is quite strong. So we are very optimistic about the second half of this year. Although the market of mobile phones is not clear, the demand for data center is not clear in the second half of the year, but it is very optimistic in the long run. Gou Jiazhang concluded.

Under the huge market in the future, the storage industry should pay more attention to how to develop quickly, reduce mistakes and grow together with enterprises in the ecological chain.

On the basis of its superior business, Hui Rong accelerated the development of enterprise demand market. Gou Jiazhang pointed out that we believe that in the second half of this year and next year, shipments of enterprise storage control chips will grow exponentially. "I think telecommuting, home education and so on, these needs may become normal in the future. I hope that we can provide more support for the layout of 5G and AI of various enterprises after the outbreak.