Guoxin Securities released a research report saying that memory chips are standardized, and capital investment increases sharply with the upgrading of process nodes, making the industry high barriers to entry, so the industry is cyclical and CR3 exceeds 90%. Storage prices continue to fall and weak demand has led to a lengthening of the bottom of the cycle to post -3Q23. The original factory has been reducing production and cutting capital expenditure, and the 2H23 price decline is expected to narrow, and the industry will pick up at a low growth rate after bottoming out. With the increase in data volume in the future, unit server NAND usage will increase 3 times and DRAM will increase 2 times. In 21-27, the demand for intelligent storage in automobiles will grow at a compound growth rate of 20%.

▍ Guoxin Securities main points are as follows:

Semiconductor storage will develop in the direction of high density and large capacity with the increase of data volume.

The semiconductor memory stores information by storing charge in a semiconductor medium. According to WSTS data, the global integrated circuit scale in 22 years is 474.4 billion US dollars, of which the memory chip scale is 129.8 billion US dollars (23%), and the logic chip constitutes the two pillars of the integrated circuit. In the future, NAND will develop from flat to 4D, DRAM process will continue to shrink, DDR5 will accelerate penetration, and advanced packages such as HBM will accelerate penetration in high-performance areas such as AI servers.

Storage industry: cycle and growth coexist.

Memory chips are standardized, and capital investment increases sharply with the upgrading of process nodes, making the industry high barriers to entry, so the industry is highly cyclical and CR3 exceeds 90%. Storage prices continue to fall and weak demand has led to a lengthening of the bottom of the cycle to post -3Q23. The original factory has been reducing production and cutting capital expenditure, and the 2H23 price decline is expected to narrow, and the industry will pick up at a low growth rate after bottoming out. With the increase in data volume in the future, unit server NAND usage will increase 3 times and DRAM will increase 2 times. In 21-27, the demand for intelligent storage in automobiles will grow at a compound growth rate of 20%.

Upstream memory chips: the localization process is accelerated.

DRAM market CR3 exceeds 95%, mainly applied to mobile devices (36%) and servers (19%); CR6 accounts for 98% of the NANDFlash market, and solid state drives (SSD) are the main products. At present, China's storage demand accounts for 30% of the world's total, and the self-sufficiency rate is less than 10%. Domestic manufacturers and equipment manufacturers such as Changxin and Changxin jointly promote the acceleration of the localization process. In addition, the niche storage market totaled more than 16.4 billion U.S. dollars, overseas large factories continued to withdraw, domestic manufacturers emerged to meet the growth of new machines.

Downstream storage modules: enterprise-class and industry-class markets are the main growth points.

SSD and embedded storage are the main forms of NANDFlash modules. according to Yole data, the total SSD market size is expected to increase from us $29 billion to us $67 billion in 22-28, with a CAGR of 15%. Among them, enterprise-level and industry-level SSD are the main growth points. The main source of growth for DRAM modules (DIMMs) is servers, with RDIMM shipments growing at a compound annual rate of 15% in 22-28, and LRDIMM and other server memory modules growing at 21%, according to Yole data.

module-side supporting chips: SSD and DDR5 penetration drive industry to accelerate growth.

NANDFlash module master chip is the brain of memory, the global SSD master chip in the higher threshold of enterprise SSD accounted for 12.4 percent, industrial grade accounted for 3.7 percent, for domestic manufacturers of the main direction. With the penetration of DDR5, DRAM modules add serial detection hubs, temperature sensors, power management chips and other supporting chips on the basis of memory interface chips, and their market will increase from $0.71 billion in 21 years to about $4 billion in 27 years, with a compound growth rate of about 28%.

Industry chain related companies: domestic as the main theme of the storage industry, enterprise-level and industry-level applications as the main direction.

Related companies include Beijing Junzheng (300223.SZ), Zhaoyi Innovation (603986.SH), Dongxin Stock (688110.SH), etc. for niche storage, Tongfu Microelectronics (002156.SZ), Zhongwei Company (688012.SH) for sealing and testing and equipment, Jiangbolong (301308.SZ) for module links, and Lanqi Technology (00888.SH) for module sets or master chips, etc.

Risk:

1, demand is less than expected; 2, market competition worsens; 3, raw material procurement is limited.