The price of this type of chips has been rising for 8 consecutive months.

Up to now, the price of memory chips has been rising for nearly 8 months.From an end-user perspective, SSD (solid hard drive) prices have begun to increase since the third quarter of last year.Some electronic product enthusiasts even said that a 4TB SSD purchased on June 18 last year can now be resold for a net profit of 500 yuan.From the perspective of the chip supply chain, according to flash memory market data, the price of Flash Wafer (flash memory wafer) reached a new high at the end of February.
This wave of price increases is mainly led by the three memory chip giants Samsung, Micron, and SK Hynix.Since SK Hynix officially announced a 10%-20% increase in DRAM and NAND Flash chip contract prices in October last year, Samsung and Micron also stated in January this year that they would increase the price of DRAM chips by 15%-20% in the first quarter. .It is worth noting that the total market share of the three memory chip giants is as high as 95%, which also means that the entire storage market is in a state of rising prices.
   While reducing production, prices are increasing.
It is understood that the reason for the price increase mainly comes from two aspects: the recovery of terminal demand and the sustained production reduction strategy of the giants for over a year.
According to research firm TrendForce, the global NAND Flash industry revenue reached $11.49 billion in the fourth quarter of 2023, with a quarterly increase of 24.5%. This growth is mainly due to the recovery of terminal demand from year-end promotions and the expansion of orders in the component market, resulting in a significant increase in the shipment volume of storage chips compared to the previous year.
In recent years, the demand for large-scale model training in the cloud has also led to a surge in demand for HBM (high-performance computing storage chips, mainly used in CPUs/GPUs) in data centers. Micron, one of the three giants, recently revealed during a financial conference call that its HBM products have been sold out and most of the production capacity for 2025 has already been booked.
On the other hand, the price increase is closely related to the production reduction strategy implemented by the three giants in the past year.
After all, before the price increase, the storage chips were almost sold at cost.
Starting from 2022, due to oversupply, the prices of storage chips began to decline. In the second half of 2022, the prices of DRAM and NAND Flash were almost halved compared to the beginning of the year. This situation did not improve in the first half of 2023, with Samsung's NAND Flash almost reaching the cost price.
Therefore, the three giants tacitly chose to reduce production and cut orders in 2023.
In the first half of 2023, Samsung's DRAM chip production decreased by 20%, and NAND flash chip production decreased by 30%. There were even reports that the production reduction by the end of 2023 reached 50%.
Kim You-hyun, the CFO of SK Hynix, stated at the financial results announcement at the end of July 2023, "The inventory level of NAND is high, and we will further reduce production by 5% to 10%."
Manish Bhatia, Vice President of Micron Technology, also stated, "The reduction in the number of wafers being put into production will be close to 30%," clearly indicating the direction of further production reduction.
After experiencing price reductions and production cuts, the storage market finally saw a price increase.
In May 2023, Samsung and Micron notified distributors that they would no longer accept low-priced orders for DRAM and NAND Flash, rejecting prices below those in April. Around June, there were reports that Changjiang Storage, an original flash memory manufacturer, officially increased prices by 3-5%. Following this, Samsung Electronics, SK Hynix, and others gradually considered raising their prices.
There were also announcements from the three giants in October last year and January this year, stating a price increase of nearly 20%.
The frequent release of price increase news has also brought the storage market the long-awaited ray of hope.
"Estimates suggest that prices will continue to rise until early next year."
The industry generally believes that the price increase in the storage market will persist for a long time.
According to CFM Flash Market data, flash prices have continued to rise slightly since 2024, with a 13% increase in the price of 512Gb TLC Flash Wafers since the beginning of the year. DRAM has also returned to last year's price levels, with a 10% increase in the price of DDR4 16Gb 3200 since the beginning of the year. The graph below also shows the long-term upward trend in storage chip prices.
Clearly, the storage market has entered its second spring. Many parties believe that the price increase will continue for a long time.
For example, module manufacturer Jiang Bolong stated in an announcement that since the end of the third quarter of 2023, the reduction in production and capital expenditure by international storage manufacturers has had a significant effect. Additionally, due to the decrease in unit costs, more end-consumer demand has been stimulated, especially in the main storage applications such as smartphones and PCs, leading to the gradual recovery of the storage industry. As a result, mainstream memory prices have continued to rise.
Tianfeng Securities recently pointed out that since hitting bottom in August 2023, the NAND price index has increased by about 80%, and the DRAM price index has also increased by over 30% from its relative bottom. Storage manufacturers are benefiting from the price increase, and it is expected that both the gross profit margin and net profit margin of the sector will continue to increase quarter-on-quarter in the first quarter of 2024, realizing the logic of the previous price increase.
Gou Jiazhang, the General Manager of storage controller chip supplier Huirong Technology, stated this year that the prices for NAND Flash in the second quarter have already been negotiated and are expected to increase by 20%. Most suppliers will start making profits after the second quarter. The earliest time for an increase in NAND Flash production is expected to be in the second half of this year. It is projected that this wave of price increases will continue into the first half of 2025, and the overall upward trend is expected to last for two years.
"The fire of rising prices in the storage market ignites the controller chip market."
The recovery of storage chips has brought confidence to the entire industry chain, especially for SSD controller chips used in PCs and UFS controller chips used in smartphones.
Different from storage chips, the role of controller chips is to manage the usage of storage chips, including tasks such as data allocation, temperature management, SMART health reporting, bad block management, as well as error correction and power failure protection.
Global controller chip manufacturers can be mainly classified into two categories: the first category is self-developed solid-state drive (SSD) controller chip manufacturers who primarily use their own developed controller chips to sell SSD modules to downstream customers. Examples of such manufacturers include Samsung and Phison Electronics. The second category is independent SSD controller chip manufacturers who sell SSD controller chips and solutions to downstream customers. Examples of such manufacturers include Huirong Technology, InnoGrit, Longsys, Marvell, Realtek, and Silicon Motion.
With the recovery of the storage chip market, the controller chip industry has also received positive news. Looking at the performance of listed companies, controller chip companies are also benefiting from the recovery of the storage market. 
Leading NAND storage chip company, Phison, announced that its consolidated revenue in January 2024 reached NT$5.086 billion, a year-on-year increase of over 75%, which is the second-highest historical figure for the same period. In addition, the shipment volume of SSD controller chips in January increased by 37%, also achieving a historical high for the same period. Among them, the shipment volume of PCIe SSD controller chips increased by 75% year-on-year, setting a new record.
In the context of industry recovery, many companies have also started making forward-looking arrangements and have recently released new products, such as Huirong and InnoGrit.
For the AI smartphone market, Huirong recently launched the new UFS 4.0 controller chip, SM2756. It is reported that SM2756 has a sequential read performance exceeding 4,300 MB/s, sequential write speed exceeding 4,000 MB/s, and supports the most extensive 3-bit per cell (TLC) and 2TB QLC NAND flash capacity, meeting the data access requirements of large-scale models on the device side.
Enyx Technology, also a third-party independent controller chip manufacturer for SSDs, recently announced the release of their PCIe Gen5 controller chip, YRS820, targeting the PC market, including high-end consumer markets such as AI PCs. It is worth noting that this product is based on the RISC-V architecture. In terms of performance, the YRS820 achieves impressive sequential read speeds of up to 14GB/s and sequential write speeds of up to 12GB/s. It also boasts random read and write speeds of 2000K IOPs and 1500K IOPs, respectively. This chip is capable of enhancing gaming performance, accelerating data processing, and supporting data encryption and decryption. The release of this controller chip will further drive the development of the PC market, providing users with higher performance and faster data processing capabilities.
It is evident from the performance and applications of new products that AI has become a necessity and will be a crucial element for ensuring the continuous growth of the storage market.
In the future, in addition to the increasing demand for HBM related to AI training in the cloud, there will also be a significant need for storage and flash memory on the edge side, driven by consumer demands for privacy and personalization in PCs and smartphones.
However, the requirements for storage chips in large-scale models on the edge side are considerably high. After all, devices like smartphones cannot utilize HBM due to its high cost. In the face of such challenges, efforts are being made to lighten the load of large-scale models, allowing storage chips in devices such as PCs and smartphones to run high-quality large-scale models locally.
The application of large-scale models on PCs and smartphones in the future will bring new vitality to the SSD and UFS industries, potentially creating another wave of growth for storage chip and controller chip manufacturers.