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Here’s Ho Ho Hoping for 2024

It’s that time of the year again when experts take out their crystal ball and try to see what lies ahead in the upcoming year. Looking at the predictions and forecasts from various industry analysts, they all have one thing in common: They see the semiconductor market pick up again. WSTS updated its forecast and now sees a 13.1% growth and Gartner even an increase of 17%.

Author: Marco Mezger, Executive Vice President and COO of Neumonda 

Working in semiconductor memory, the fact that this growth is expected to be driven by DRAM and NAND technologies is particularly enticing. Especially after a year in which the major memory manufacturers lost 15 billion US Dollars in the first half of 2023 alone. So the forecasts are like an early Christmas gift for memory manufacturers.

But even though a 40% growth as predicted by WSTS or the more optimistic 66.3% growth that Gartner sees won’t be enough for the market to reach the price levels that we saw in 2021.

For this reason, the big manufacturers focus on the high margin, high bandwidth memory technologies like HBM and DDR5. After all, these technologies address the surging demand that generative AI workloads are posing in data centers. Only a year after ChatGPT was introduced the demand for AI servers is expected to exceed 1.2 million units by the end of this year. According to Trendforce, that’s a year-over-year increase of 37.7%. But even this demand did not save the industry from a double-digit decline in 2023. 

HBM stands out as a critical DRAM product for AI. With the growing complexity of training models and applications, demand for HBM is expected to skyrocket. As the average unit price of HBM is several times higher than other DRAM products, it’s projected that in 2024, HBM is poised for an annual growth rate of 172%.

This growth in AI is also significantly spurring the demand for 2.5D packaging technology that enhances AI computational power by combining computing chips and memory in one package and will ultimately drive the development of 3D packaging technologies.

What does this mean for OEMs and equipment manufacturers? 

For DRAM Gartner sees a continued reduction in inventory in Q4 of 2023, so prices will rebound and trigger a 88% growth in DRAM revenue in 2024. It’s never been a better time for industrial OEMs to take a closer look at what DRAM memories they need. And especially if they are relying on DDR3 and older technologies, to select and qualify second and third source components to have a broader choice. Some of the large manufacturers are exiting DDR3 and older technologies, so it’s better to be prepared.

With regards to NAND flash, Gartner expects that industry pricing will hit bottom over the next three to six months and consequently conditions will improve for vendors so that we will see a robust recovery in 2024, with revenue growing up 49.6% year-over-year. This means that prices will also increase, even though more slowly than DRAM. What’s more worrying is that we are headed from one of the severest downturns that the memory industry has seen to the next shortage. As the output has been cut so dramatically this year and it will take a while to ramp it up again.

Many industrial OEMs are taking advantage of the current low prices to secure demand for their upcoming projects and months.

So our wish to Santa this year: Give us Ho Ho Hope for a stable memory market next year. 

Neumonda was founded with the ambition to build the most comprehensive memory application expertise under one roof by combining memory distribution, product manufacturing and memory IP.

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July 23 2024 1:29 am V22.5.13-2