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Currency Fluctuation Limits Global Wafer Fab Equipment Revenue Growth to 9% YoY in 2022

Wafer fab equipment manufacturers’ net revenue increased to a record $120 billion.
The top five suppliers’ systems and service revenue increased to a record $95 billion.
The WFE market’s total revenue is expected to decline 10% YoY in 2023.
EUV lithography outlook remains strong despite weaker WFE outlook.
Weakness in wafer fab equipment spending in 2023 will drive lead time normalization.

San Jose, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – June 12, 2023

Wafer fab equipment (WFE) manufacturers’ revenue increased 9% YoY to a record $120 billion in 2022 despite the macroeconomic slowdown, currency fluctuations, component shortages and logistics disruptions. The increase was due to continued strength in investments by customers for both leading and mature node devices across segments, including IoT, AI, HPC, automotive and 5G. The top five suppliers’ systems and service revenue increased to a record $95 billion.

The WFE market’s revenue is expected to decline 10% YoY in 2023 to $108.45 billion after three consecutive years of growth. Despite a weaker WFE backdrop for 2023, the EUV lithography outlook remains strong due to the continued penetration of EUV into memory and logic, and foundries ramping up production of 3nm process nodes by applying Gate-All-Around transistor and FinFET architectures with increased EUV technology adoption.

Associate Director Dale Gai said, “During the past six months, TSMC has pushed out new capacities in 7/6nm and 5/4nm in the light of weaker market demand, while the capital spending on 3nm remains nearly the same as it planned at the beginning of 2023.”

Source: Wafer Fab Equipment Revenue Tracker, Counterpoint Research

Commenting on the WFE market, Senior Analyst Ashwath Rao said, “The size of the WFE market in US dollar terms contracted by more than 8% in 2022 due to the impact of currency fluctuations, especially depreciation in the yen and euro-denominated sales since the beginning of 2022. Increased R&D spending in 2022 ahead of the inflection positions the WFE market to outperform the semiconductor market in the long term as these new technologies transition to volume manufacturing.”

Commenting on the market dynamics playing out in 2023, Rao said, “Manufacturers are more skewed towards foundry-logic segments today unlike in 2019, and with overall backlog strength, increased visibility in terms of long-term agreements and subscription model will help limit the downside. The weakness in wafer fab equipment spending in 2023 will drive lead time and inventory normalization. The slowdown in memory-oriented investments will begin to recover gradually starting in the second half of 2023, and 2024 will be a big year for the equipment industry. Manufacturers are well positioned to take advantage of the opportunity.”

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the technology, media and telecom (TMT) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Ashwath Rao

Dale Gai

Neil Shah

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Global Wafer Fab Equipment Revenue to Grow 18% in 2022

New Delhi, London, Hong Kong, Beijing, San Diego, Denver, Seoul, Buenos Aires – June 2, 2022

Global Wafer Fab Equipment (WFE) manufacturers’ revenue will grow 18% in 2022 to exceed $129 billion, according to Counterpoint Research’s Wafer Fab Equipment Revenue Tracker. Critical technology transformations, increasing device and manufacturing complexity, aggressive investments in higher semiconductor performance and active investments in production capacity expansion will drive WFE spending in 2022. The chip shortage will continue to be a concern for the WFE supply chain in 2022.

WFE market outlook looks impressive

Continuous efforts by foundries to increase wafer output, reduce defects and improve yield.
Demand exceeding supply.
Increase in wafer-processing steps to produce diverse and complex applications.
WFE spending limited by supply in 2021, with unmet demand pushed to 2022 and beyond.
Long-term secular growth drivers including rising semiconductor content and increasing device complexity remain intact.
Increased capex allocations by customers.

Commenting on the WFE market, Senior Analyst Ashwath Rao said, “Healthy WFE spending outlook, strong semiconductor demand across segments, rising capital intensity and innovative product portfolio will drive Top 5 WFE manufacturers’ revenue past $100 billion in 2022”. At the same time, the availability of components going into WFE subsystems has been hampered due to supply chain disruptions, thereby increasing the equipment lead time and delaying deliveries. This will impact revenue growth in the first half.

WFE Market: 2018 – 2021

WFE revenue in 2021 reached a record high of $110 billion, an increase of 33% YoY, driven by strength across device segments NAND, DRAM and Foundry/Logic.
Service revenue of the Top 5 suppliers’ increased 29% YoY to $22.2 billion.
In 2020, growth across all segments of the market led by NAND recovery, Foundry/Logic expansion and a slight increase in DRAM helped achieve overall revenue growth of $83 billion, an increase of 17% YoY.
In 2019, digestion of capacity additions by memory customers in a weaker demand environment and acceleration in ramping of new leading-edge nodes by logic customers led to a decrease in growth.

WFE Market: 2022 Outlook

2022 revenues are expected to grow 18% YoY, with the Top 5 WFE suppliers’ revenue surpassing $100 billion.
Top 5 suppliers’ systems revenue will surpass $75 billion, an increase of 18% YoY, and service revenue will be at $27 billion, an increase of 24% YoY.
Strong growth in services is expected to continue in 2022, mainly driven by a rapidly growing installed base, increasing complexity of systems, tighter time-to-market requirements for customers, and expansion of service opportunities at trailing edge nodes.
Investment in R&D and increasing capacity both at customers and equipment manufacturers will remain a top priority in 2022.

Rao said, “A huge order book, record backlog and demand exceeding capacity will enable equipment manufacturers to expand their capacity to address the shortages and generate higher revenue growth”. A gradual recovery in growth will be observed in the second half of 2022 despite supply chain disruptions due to COVID-19 and heightened geopolitical conflicts. But the impact of cost increase due to labor, components from suppliers and freight charges will lower the gross margin in 2022. Trends such as export regulations between regions will also require close monitoring. Therefore, Q2 growth is expected to be muted.

Priority to manage supply chain constraints in partnership with suppliers and chipmakers will help meet current and future demand by

Actively adding and improving capacity.
Assigning engineering resources to improve supply chain flexibility.
Advancing ecosystem collaboration to fight challenges.
Meeting device performance and cost targets.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts:

Ashwath Rao

Dale Gai

Neil Shah

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Global Semiconductor Shortage Likely to Ease Significantly in H2 2022 Despite China Lockdowns

London, Hong Kong, Boston, Toronto, New Delhi, Beijing, Taipei, Seoul – April 20, 2022

Global semiconductor chip shortages are likely to continue easing during the second half of 2022 as demand-supply gaps decrease across most components, according to Counterpoint Research’s latest smartphone Component Tracker Report.

These shortages have plagued many industries for the past two years and vendors across the supply chain have spent much effort dealing with uncertainties. Since late 2021, demand-supply gaps have been shrinking, signaling an approaching end to supply tightness across the broader ecosystem.

Inventory levels of 5G-related chipsets including mainstream application processors, power amplifiers and RF transceivers have increased significantly in 2022 Q1, easing the shortage for smartphone components rapidly. Though some exceptions still exist, like older-generation 4G processors as well as power management ICs.

Smartphone Component Shortage Outlook for 2022

Across PCs and laptops, the supply gap for the most important PC components like power management ICs, Wi-Fi and I/O interface IC has narrowed. “We saw OEMs and ODMs continued to accumulate component inventory to cope with uncertainties cropping up from COVID-19 earlier this year.” said research analyst William Li, who focuses on semiconductors and components.

However, Li suggests H1 2022 will see downward shipment revisions, largely due to increasing inventory in the channel and a slowdown in consumer PC momentum. “Coupled with wafer production expansion and continuous supplier diversification, we have witnessed significant improvement in the component supply situation, at least in the first quarter,” observed Li. “The big risk factor moving forward is the lockdowns happening across China right now, especially in and around Shanghai. But if the government can manage the outbreak and help key ecosystem players turn the corner quickly, we believe the broader semiconductor shortage will ease around late Q3 or early Q4.”

“Last year, supply tightness dovetailed with the rebound in consumer and business demand, causing a lot of headaches across the supply chain. But over the past few months, what we have seen is softening demand intersecting nicely with higher inventories,” observed Dale Gai, director of Counterpoint Research’s semiconductor and components practice. “The issue now isn’t shortages but shock to the system from lockdowns, which is having a domino effect across China at the moment.”

Industry and government alike have been focusing on dealing with the short-term risks associated with unpredictable and sharp production stoppages. Senior analyst Ivan Lam noted, “Holding the line is a priority, especially for local governments, and we have seen how some companies are able to continue operations as closed-loop systems. The supply chain was lucky last year, but this latest COVID wave is a big test the country needs to manage carefully but quickly. It is crunch time now and all eyes are on China.”

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Analyst Contact:

William Li

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Mobile Demand Raises DRAM Revenue by 30% YoY to $19 bn in Q1 2021

London, Hong Kong, Boston, Toronto, New Delhi, Beijing, Taipei, Seoul – Jun 25, 2021

Global DRAM revenues rose to $19 billion in Q1 2021, increasing by a solid 30% YoY and 9% QoQ. Distance education and work from home (WFH) continued propelling a substantial demand for smartphone and laptop DRAM, resulting in a 6% growth in bit shipment and a 3% rise in ASP over the previous quarter.

Associate Director Brady Wang said the Chinese handset makers stepped up their smartphone shipments in the first quarter, intending to gain shares from the beleaguered Huawei. In addition, the high-density LPDDR4x memory prices softened in H2 2020, increasing smartphone DRAM content and making 6GB the minimum standard for mid- to high-end smartphones since 2021. As a result, the average DRAM capacity in smartphones clocked at 5.3GB in Q1 2021, rising impressively by around 21% YoY and 7% QoQ. Similarly, servers experienced recovery in demand, and the adoption of a new data-center CPU bumped up server content per box. Therefore, the server segment’s DRAM demand rose as well.

According to Wang, DRAM is already an oligopolistic market with an Herfindahl-Hirschman Index (HHI) of 3,138. A significant capacity expansion by any player will soon turn around market status and reduce the overall profitability. Therefore, this year, all three major players will spend most of their resources in migrating to advanced nodes, a process that is bound to reduce production capacity. In addition, transportation and component shortage concerns will force device vendors to place orders earlier than usual. When coupled with the growing demand for personal computers, games and servers, these factors signal the possibility of the DRAM market turning to a shortage this year. The smartphone market is recovering at present, but its cost sensitivity means that a DRAM price spike may put the brakes on smartphone DRAM content growth.

Competitive Landscape

The DRAM industry is dominated by three major players that collectively account for about 95% of the market’s bit shipments and revenue.

Samsung Electronics

With $7.9 billion in revenue, Samsung led the DRAM market in Q1 2021. The South Korean semiconductor giant continued commanding over two-fifths of the DRAM market revenue, overshadowing its nearest competitor by over 41%. Samsung’s DRAM bit shipment growth came from actively responding to the (i) 5G-related surge in smartphone demand, (ii) rising server demands for data centers and (iii) rise of home entertainment culture that increased memory content in TVs and STBs to support 4K UHD content and streaming.

Research Associate Siddharth Bhatla sees 1Z nm or 15 nm as Samsung’s most advanced mass-produced DRAM node from the technology perspective. The company’s plans include beginning mass production of 14 nm node in H2 2021. Samsung aims to differentiate its DRAM offerings using multi-layer EUV on its 14 nm node, building upon the single-layer EUV in its current 15 nm node.

SK hynix

Ranking second, SK hynix accounted for over 29% of the DRAM industry’s Q1 2021 revenues. Surpassing Micron by over 25%, its revenues rose by over 28% YoY in that period, in line with the industry’s overall growth. In addition, the company’s bit shipments rose 4% QoQ, thanks to its ability to actively cater to the surging demand for mobile and PC memory. By the year-end, SK hynix aims to (i) ramp up the production of its 1Z nm DRAM and (ii) complete development and begin mass production of its 1α-EUV node.

Micron Technology

Micron achieved a 44% YoY jump in its DRAM revenue in Q1 2021, continuing to grow fastest among the big three since the preceding two quarters. Micron was the first among the big three to begin mass production of 1α DRAM, accounting for one-fourth of the industry’s DRAM revenue. However, Micron’s 1α node is based on DUV, an older technology that may face severe cost competition once the EUV-based 1α DRAMs reach the mass market.

Feel free to contact us at press(at)counterpointresearch.com for questions regarding our in-depth research and insights, or for press enquiries.

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Brady Wang

Siddharth Bhatla

Counterpoint Research
press(at)counterpointresearch.com

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NAND Flash Recovery Begins on Rising Demand and Supply

London, Hong Kong, Boston, Toronto, New Delhi, Beijing, Taipei, Seoul – June 8, 2021

In the first quarter of 2021, the NAND flash memory market rebounded by 4.6% QoQ to $15.3 billion, while bit shipment increased by 12%.
Leading manufacturers are developing new NAND flash with additional layers to lower bit density and increase manufacturing efficiency. In the first quarter of 2021, the bit shipment growth for the layers 64 to 130 climbed by over 20%.
Samsung dominated the NAND market revenue share, SK hynix achieved the highest QoQ growth in revenues, and Micron led the industry in the volume production of 176-layer NAND flash.

Global NAND flash revenues increased 4.6% in Q1 2021 to $15.3 billion over the previous quarter. Distance education and remote working propelled the demand for notebook SSDs, which helped the big players in offsetting the reduced NAND flash demand from the server and data center market.

Associate Director Brady Wang said the continued expansion of smartphone storage capacities, particularly by the Chinese OEMs, created an unusual scenario for NAND flash usage. The average capacity of smartphones climbed 6% in Q1 2020, according to Counterpoint data. As a result, contract prices for NAND flash fell by 4-7% in Q1 2021, which is much lower than the 7-11% drop in Q4 2020. The decrease eased in late Q1 2021. In the same period, NAND flash spot prices fell 1-3% but started increasing by that quarter’s end.

Wang added that in Q1 2021, memory vendors were in full force migrating to more layers. Bit shipment increased 12% QoQ, while overall ASP decreased 6% in the same period. In terms of layers, the ratio of bit shipment for the layers 64 to 130 increased from 52% in Q1 2020 to 81% in Q1 2021. This increase in layer count allowed an annual reduction in NAND costs by an average of 20%, which however is less than the historical 30%. Ideally, NAND flash can reach more than 500 layers. However, in reality, the NAND flash production starts encountering several challenges after 100 layers, like a high aspect ratio and long manufacturing time. As a result, vendors adopt Core Over Periphery (COP)/Circuit Under Array (CUA) to reposition the logic circuit to below the memory cell. Doing so allows them to increase the number of net per wafer. Also, double stacking can help increase the number of layers quickly but may result in higher costs due to lower yields.

On the handset side, key NAND flash players are proactively marketing the high-density uMCPs at advantageous costs. Chinese smartphone MCP densities rose from 8GB/128GB to 12GB/256GB over the previous quarter.

Competitive Landscape

Currently, the NAND flash industry is dominated by six major players. This landscape is likely to undergo a major rejig in the near term, given the ongoing acquisition of Intel’s non-volatile memory solution unit by SK hynix.

Samsung

Samsung led the NAND market in Q1 2021 with $5.1 billion in revenues, overshadowing its nearest competitor by over 80%. The South Korean electronics giant continued accounting for over one-third of the NAND market revenue for the fifth consecutive quarter. The weakness in US dollar against the Korean Won worked out negatively for the company’s component business, but it was fully compensated by its end-user product business.

Samsung is migrating to the 128-layer 6^th generation V-NAND, aiming to use this technology in the near term for driving its bit growth and cost competitiveness. Samsung’s single-stack process in the 128-layer 6th generation V-NAND allows it to have lower costs than competitors which use a double stack. However, the company will adopt its 7th generation V-NAND, a double stack-based 176-layer memory, later this year to reinforce its technological competitiveness at the cost of decreasing profit margin.

SK hynix

SK hynix’s revenues from NAND achieved a good 12% QoQ growth in Q1 2021 despite enduring a 7% drop in its ASP. This stellar performance stems from (i) the sales growth of its high-density smartphone memory products, and (ii) enhanced cost competitiveness of the company’s major products powered by yield improvements.

Research Associate Siddharth Bhatla said SK hynix achieved a bit shipment growth of a whopping 21% in Q1 2021, which was over double of the same for WDC and Samsung. The company expects the NAND market’s bit demand growth to be in mid-30% over 2021, which it plans to cater proactively in this year’s second half. By this year-end, the company plans to raise its NAND product mix of 128-layer to 80% and begin the mass production of 176-layer node.

WDC

Ranking third in revenue, WDC is the only NAND flash manufacturer that also makes HDDs. The company’s portfolio in laptop SSDs helped it benefit from the surge in PC demand, resulting in an 8% increase in its QoQ bit shipments in this quarter. The company’s diversified end-market portfolio in client devices and solution experienced a revenue growth of 10% and 8% respectively, balancing its 20% revenue decline in the data center market.

Micron

Micron is leading the NAND industry’s 176-layer node, having begun its volume production during the past quarter, which is ramping up considerably over time. Micron plans to make this node the company’s workhorse for 2022, augmenting the company’s bit growth and long-term cost reduction strategy. The company is focusing on increasing the mix of QLC NAND in its product portfolio. This technology’s cost-effectiveness is driving the transition of the compute memory industry from HDDs to SSDs.

Micron has positioned itself to capitalize on the booming demand for non-volatile memory products, which is created by the increased adoption of AI and 5G around the world’s data centers, intelligent edge and user devices.

Feel free to contact us at press(at)counterpointresearch.com for questions regarding our in-depth research and insights, or for press enquiries.

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Analyst Contacts

Brady Wang

Siddharth Bhatla

Counterpoint Research
press(at)counterpointresearch.com

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Smartphones Beat DRAM Drum to Meet Performance Demand

Smartphones are getting more performant with each passing day, thanks to the confluence of user demands and technological advancements. One of their key components is DRAM, a high-speed-low-latency memory module that serves as a temporary memory for an application processor (AP). Commonly known as RAM, DRAM stores the OS and running applications’ working data. A larger DRAM enhances a phone’s capability to host more applications simultaneously, enabling users to switch between apps seamlessly without needing to reload them back from the flash.

Like every other smartphone component, DRAM has improved over time in several aspects: capacity, speed and affordability. On average, smartphone DRAM capacity has risen consistently over time. Several reasons can explain this phenomenon: (i) Intense megapixel race in cameras, (ii) Surging performance needs of big apps and games, and (iii) Increasing prevalence of multi-tasking and high-resolution-high-framerate displays. Users now expect razor-sharp photography, high framerate gameplay, and the capability to drive large applications parallelly without any lag.

Currently, the DRAM sizes embedded in smartphones vary greatly, starting from 2GB for the low-cost segment to 18GB for the flagship models. Every two in five smartphones sold in 2020 had 4-6GB DRAM. Therefore, most phones of the day support moderate gameplay along with some degree of multi-tasking. Even though it may seem so, more DRAM is not always merrier. Bigger DRAM consumes more power irrespective of whether it is fully or partially used. So, smaller DRAM is favourable for budget phones from the battery and cost perspective.

Android needs more DRAM than iOS

According to our Mobile Handset Sell-through Tracker, the global average DRAM capacity almost reached the 5GB mark in Q4 2020, touching 4.5GB and 5GB for iOS and Android smartphones respectively, and growing 22% YoY in 2020 overall. The Android smartphones’ average DRAM sustained stable growth in 2019-2020, while the iOS segment had it relatively uneven. For the latter, high growth phases primarily centre around the new iPhone releases, scheduled in the fourth quarter every year.

The Android segment’s growth faced a slump during Q2 2020-Q4 2020 due to the bearish market following COVID-19. For the iOS camp, the release of iPhone 11/Pro/Max and iPhone 12 Pro/Max resulted in a steep rise in Apple’s memory numbers, owing to their 4GB and 6GB DRAMs respectively.

Overall, the DRAM content for iPhones was consistently dwarfed by the other brand families in this list. This disparity stems from the far more efficient memory management approach that iPhones employ. The iOS uses reference counting, a mechanism that needs much lower working memory than Android’s garbage collection approach. Also, iPhone’s higher bandwidth NAND flash reduces the time required to reload data from storage. Therefore, iPhones can typically rely more on flash storage to cope with DRAM overflow compared to their Android counterparts. As per our Component Price Tracker, a significant drop in DRAM prices facilitated the smartphone OEMs’ transition to larger memory units in 2019-2020. The LPDDR4x DRAM prices tumbled by over 20% in the H2 2019-H2 2020 period. By the end of this period, 6GB emerged as the DRAM size variant with the minimum cost per GB.

DRAM Size Ranking by Brand Family

According to our Smartphone DRAM Status Update for Q4 2020, bigger average DRAM numbers signal a greater proportion of high-end phones in a brand’s portfolio, especially in the Android segment. This section compares the growth in DRAM capacities of the top six best-selling smartphone brand families during Q1 2019-Q4 2020.

Apple recorded the highest DRAM growth numbers, followed by Huawei and Samsung. The DRAM content for the bottom three brands grew half as fast as the ones on the top. Early adoption of larger DRAM units justified the lower growth for smartphones under the OPPO and vivo umbrella. The same was the case with Xiaomi’s cash-cow sub-brand Redmi that focuses on the budget segment.

Over half of Huawei’s top three best-selling phones – P30, P30 Lite and P30 Pro – were sold in 8GB variants, while the 6GB variants accounted for another one-third. Among Apple’s top three best-selling model families – iPhone 11, iPhone XR and iPhone 11 Pro Max, the 4GB RAM variants made up for 70% of sales while the 3GB ones took the remaining 30%. Other notable OEMs in this aspect were Black Shark, OnePlus and Razer with their 8.5GB, 8.4GB and 8GB average RAM densities respectively.

Our quarterly report on smartphone DRAM presents a more profound analysis in this direction, featuring (i) quarter-wise DRAM numbers and personalised insights for major smartphone OEMs, (ii) change in market share of smartphone DRAM densities and (iii) correlation heatmap for the primary camera and DRAM capacity.

Conclusion

Growing affordability of LPDDR4x memory, rising user expectations and ballooning memory footprints of modern apps have played a crucial role in driving up smartphone DRAM sizes over time. The increasing prevalence of multi-tasking can certainly inflate the users’ memory needs.

Users invest in large DRAMs, hoping to future-proof their phones. But little are they aware of the raised power consumption of these large memory units — as smartphones in the present need just 4GB DRAM for optimal performance. On the other hand, the gaming-oriented ones need a minimum of 8GB DRAM for smooth multi-tasking alongside heavy gaming. The smartphone DRAM of the budget segment should see good growth in the near term, and it will be interesting to see how far up the premium segment pushes the DRAM capacities.

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Smartphone Storage Capacity Zooms on Increased Demand

Storage capacity is quickly gaining traction as one of the more important criteria for which smartphone OEMs compete among themselves, especially in the premium Android segment. Better cameras, higher resolution displays and faster wireless connectivity have enhanced the ubiquity of high-resolution videos, boosting the demand for smartphone NAND memory. This article discusses smartphone NAND capacity trends in 2019-2020, giving readers insights on (i) who is shipping phones with the largest memory on average and (ii) which NAND storage sizes are selling the most.

The global smartphone industry is experiencing an increasing trend of adoption of larger NAND capacities. In 2020, smartphones crossed the 100GB mark for average NAND capacity. The high-end smartphones benefitted from the high-capacity and high-speed UFS NAND, whose prices reduced significantly in the past two years, according to our Component Price Tracker.

With their higher price point, iPhones have historically retained a much higher average NAND-flash density compared to their Android peers. However, this gap is quickly reducing due to (i) Apple’s decision to limit the iPhone 12 storage to 512GB and (ii) rapidly rising storage capacities in Android smartphones as per our historical data and forecast of smartphone memory for the 2018-2024 period.

NAND capacity ranking of smartphone OEM brands

Huawei led the average NAND flash content rankings in Q4 2020. As shown in the chart below, Huawei was closely followed by Apple and OPPO while Motorola and LG found themselves at the list’s bottom. Here, the top players shipped phones with average NAND capacities of over two times that of the players at the bottom of the list.

Huawei’s average NAND density was much higher than any other Android OEM in Q4 2020, reflecting its focus on the high-end smartphone segment in the past few years to improve margins. In the 2019-2020 period, nearly half of Huawei’s and Apple’s smartphone shipments came from their 128GB and 64GB variants, respectively. In the same period, Huawei’s and Apple’s 128GB variants experienced a yearly growth in low-to-mid teens for shipments. In comparison, their 64GB variants saw nearly a double-digit and over 1% decline, respectively.

According to our Global Handset Model Sales Tracker, the Huawei P30, P30 Lite and P30 Pro collectively made up for nearly one-eighth of the company’s 2019-2020 shipments. From these, the 128GB variants accounted for roughly three-fourths of the sales. The company’s top 20 shipped model families made up over half of its sales. Out of these, the 128GB variants made up nearly 60% of the shipments.

On the other hand, the iPhone 11, iPhone XR and iPhone 11 Pro Max together accounted for nearly half of Apple’s shipments in the 2019-2020 period. Among these model families, the 64GB variants made up for over half of their sales. OPPO’s top five best-selling smartphones contributed to 30% of its 2019-2020 shipments. Among them, the 32GB, 64GB and 128GB variants took nearly one-third of the shipments each.

Smartphone shipments dominated by 128GB NAND

For smartphone NAND Flash, 128GB is becoming the minimum standard for storage capacities in the mid-end to high-end segment. According to our Smartphone NAND Flash Status Update for Q4 2020, over one-fifth of the sub-64GB smartphone market jumped to 128GB. A similar but smaller transition occurred from 64GB to 256GB-plus variants. As a result, the 64GB-plus market experienced dramatic growth driven by (i) rising consumer demand for high-resolution video content and games, and (ii) significant price drop in eMMC and UFS NAND flash in the past few years.

Conclusion

Falling prices of high-speed UFS/uMCP storage and the inclination of smartphone users towards more extensive storage capacities have gone hand in hand to raise the market share of 64GB-plus smartphones in 2019-2020.

A detailed report on ‘Smartphones Memory Historical Data and Forecast, Worldwide Demand, 2018-2024’ is available on our website for paying subscribers.

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Shakeout Coming in AI Chip Start-Up Market in 2020

Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego

January 20th, 2020

The rapid adoption of AI has spurred the development of a new breed of AI chip with the performance needed to meet the high processing and low power requirements of machine learning and deep learning applications. There are now more than 80 start-up companies around the world developing AI chips for training and inference.

These start-ups are focused on developing chips designed for specific AI workloads and use cases using new processor architectures which address the so-called “memory bottleneck” by adopting a much better balance between memory and on-chip compute. As a result, they hope to deliver dramatic improvements in performance and efficiency compared to today’s CPUs and GPUs.

AI-friendly memories being adopted by start-ups include near-chip memories (DRAM and NAND flash), on-chip memories (SRAM) and emerging NV memories. “Some of these also start-ups use analog memory technologies which promise to reduce power consumption from milliwatts to microwatts” said Gareth Owen, Associate Director of Emerging Technologies at Counterpoint Research, “This is ideal for the always-on inference market, for example, for smart speakers, potentially increasing battery life from days to months. However, there are still many challenges, particularly associated with mass production.”

The current AI landscape is still in flux. Although a host of AI start-ups are developing new hardware architectures and software stacks, client companies do not want to be locked to any specific AI acceleration architecture, particularly with consolidation likely in the next few years. Also, they want to ensure that solutions are scalable.

In the training market, competition will be particularly tough. Start-ups will have to compete against Nvidia as well as home-grown products from potential customers such as Amazon, Alibaba, Baidu, Facebook, Google and Tencent. In addition, the cloud training market will be a smaller market than the inference market.

A small number of vendors, such as Graphcore and Habana Labs, have already launched commercial products, mostly PCI-type plug-in accelerators. However, they are competing against Nvidia, who will be tough to beat for several reasons, but particularly due to its strong software ecosystem. As a result, many start-ups are staying out of Nvidia’s way and focusing on the inference market.

In contrast, the edge-based inference market is still in its infancy with many new players and new approaches. It will be a much bigger market opportunity than the cloud data market, with demand for AI chips in potentially billions of industrial and consumer devices and hence with a wide range of different requirements. Like the server chip vendors, however, edge-based chip start-ups will need to focus on very specific markets differentiated, primarily, by processing capability, power and cost requirements.

Key start-ups in the inference market include Gyrfalcon, Efinix and Syntiant which have already launched commercial products, and Flex Logix, Mythic and Blaize which are sampling and will offer commercial products later this year.

However, these start-ups face their own unique set of challenges. To be successful, they must offer chipsets that are highly scalable and flexible, achieve the right balance between performance and power budget but also feature strong ecosystem support and a comprehensive software stack. Time to market will also be key.

They will also face tough competition from established players such as Intel, Nvidia, Xilinx and Microsoft’s Altera who will be under pressure to acquire emerging winners in order to maintain and increase overall market share. This has already started to happen with Intel’s recent acquisition of Habana Labs for $2 billion.

At present, it is not clear who will be the winners or losers, but the industry will not accommodate many new chip suppliers. A few will get acquired, but most will disappear.

“We believe that there will be consolidation in the market during the next two years, due predominantly to a mismatch between actual performance from working silicon and predicted theoretical performance,” said Peter Richardson, Research Director at Counterpoint Research. “Many of these start-ups have not developed software in tandem with hardware and thus are not able to perform accurate performance modelling, resulting in shortfalls in actual performance achieved.” he added.

Ultimately, the differentiator may not be the company with the best hardware solution but the one with best software/hardware mix. Established players such as Intel and Nvidia will continue to dominate the market landscape due to the robust developer ecosystems they have created around their AI chipsets.

The full report is available for purchase on our research portal. Please feel free to reach out to us at press(at)counterpointresearch.com for further questions regarding our in-depth latest research, insights or press enquiries.

Background:

Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.

Analyst Contact:

Gareth Owen

Counterpoint Research
press(at)counterpointresearch.com

Expected Memory Market Rebound in 2020 and Continuous Investment Can Strengthen Samsung's Leading Position in Memory

Samsung Electronics announced that it achieved memory revenue of 13.26 trillion won (USD 11.48 billion) in Q3 2019, up 7.8% sequentially, but down 37% year on year, mainly due to the weak memory market.

Unlike other memory companies that are planning on reducing memory CAPEX in 2019 and 2020, Samsung’s 2019 Capex will reach 23.3 trillion won (~USD 20 billion), which is at a similar level to that of 2018. The accumulated investment in the first three quarters was 16.8 trillion won and will invest the other 12.2 trillion won in the fourth quarter. Most of the remaining CAPEX in 4Q will be used to build memory infrastructure, including the second phase of Samsung’s fab in Xi’an’s and Pyeongtaek. Both are expected to be in mass-production in 2020 to meet the mid- to long-term demand. It is in line with Samsung’s long-term strategy to increase investment as the market cycle reaches the bottom.

Exhibit one is Counterpoint’s estimate of revenue for both DRAM and NAND. Exhibit 2 shows our estimate for bit shipment and ASPs of both.

Exhibit 1: Historical revenue of both DRAM and NAND flash, 1Q18-3Q19

Exhibit 2: Historical bit shipment and ASPs of both DRAM and NAND flash, 1Q18-3Q19

Samsung will continue to drive the technology conversion of both DRAM and NAND to reduce the production costs and widen the gap to its other competitors.

The percentage of Samsung’s 1Xnm DRAM capacity will be close to 80% by the end of 2019; higher than other players. Also, the next 1y-nm DRAM will become mainstream in the first half of 2020.

From the perspective of NAND flash, Samsung is also converting 96-layer fifth-generation V-NAND technology to the 136-story sixth-generation V-NAND, which can increase the bit density and reduce the cost of a single-chip.

Samsung expects bit consumption of both DRAM and NAND in smartphones will both increase because 5G smartphones will increase the demand for high-density and low power DRAM.

The recovery of the data center and the launch of new CPUs from Intel will both drive high-density, and high-performance SSDs. At the same time, the adoption rate of SSDs in PCs will also increase steadily.

The inventory of both DRAM and NAND continues to drop. However, DRAM inventory may increase again as Chinese manufacturers start to build inventory to avoid being impacted by trade wars.

Although the demand for both DRAM and NAND is gradually increasing, Counterpoint expects that the ASPs of both will still see a mild decline in 4Q 2019. However, prices are expected to rebound from the 1Q 2020 because of pre-orders for Chinese New Year and the release of new 5G smartphones. The inhibitors to higher prices, however, are the pre-established chip inventory by Chinese companies.

Counterpoint suggests memory vendors carefully check whether smartphone OEMs have placed double orders. Also, they should understand the operating conditions of OEMs via Counterpoint’s tracking services to mitigate the risk of oversupply and excessive inventory.

Samsung DS is Ready to Ride the 5G Wave

Samsung DS (Device Solution) is ready to unleash the huge potential of 5G and IoT, with comprehensive upgrades to the mobile processor, Neural Processing Unit (NPU), memory, display panel, battery, and even discrete components.

On September 4, Samsung LSI released its first 5G-integrated SoC, Exynos 980. The new chipset adopted the latest ARM architecture consisting of 2x cortex-A77 plus 6x cortex-A55. It can support up to 3.55Gbps downlink speed when combining 2CC LTE and 5G connectivity. Besides, the Exynos 980 also integrates the new generation of NPU with increased computing power.

In the quarter ended June, Samsung DS became the major business group for Samsung as it raked in over KRW 23.5 trillion (roughly US$ 20.3 billion). With a strong portfolio of products, the group is close behind Intel in the race for the semiconductor crown.

Exhibit 1: Samsung Exynos Platforms for 5G Commercialization

Source: Samsung Future Tech Forum

With the balanced performance and cost, Exynos 980, targeting both high-end and mid-range segments, is expected to significantly bring down the price of 5G smartphone launched in H1 2020. Besides the strong support of the Samsung A series, Exynos has also got a number of design wins from leading Chinese OEM like Vivo.

To address the increasing demand for high bandwidth in 5G era, Samsung will further boost the performance of mobile DRAM with a new concept memory called LPDDR5 (Low Power DDR5), as the successor of LPDDR4x. It delivers higher throughput, but also consumes less power. In terms of NAND flash, Samsung will extend the adoption of UFS3.0, which features twice the transfer speed of the previous UFS2.1.

As 5G is expected to be power-hungry, smartphone designers will benefit from adopting the flexible AMOLED to extend the battery life. The display not only features better power efficiency but also has a slimmer form-factor to save more space for a bigger battery.

Exhibit 2: Samsung Flexible AMOLED for 5G Design

Source: Samsung Future Tech Forum

Speaking of battery, Samsung SDI has developed a broad polymer cell lineup, with scalable capacity and high energy density. Clearly, Samsung is ready to address the various smart devices that will emerge in the 5G era.

Exhibit 3: Samsung Lithium-ion Cell Lineup for Smart Devices

Source: Samsung Future Tech Forum

Counterpoint believes that key players of the 5G supply chain have achieved significant progress in paving the way to large scale commercialization. With more 5G capable models set for launch in 2020 at a cheaper price, we expect the stagnant smartphone market will get fresh impetus. This can result in growth coming back to the smartphone market by H2 2020.

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Insights Tag： memory

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