It is no exaggeration to say that all of these keywords have affected the semiconductor market this year: inflation, rising interest rates, slowing consumer sentiment, the Ukraine-Russia war, the US-China semiconductor hegemony war, and supply chain restructuring. The semiconductor downcycle is deepening amid forecasts of reduced investment and production due to inventory buildup.

According to the industry, the semiconductor industry is expected to begin to rebound in the second half of 2023. The prerequisite for this is ‘inventory liquidation.’ With the stock prices of semiconductor companies such as Samsung Electronics and SK Hynix stagnating or falling, the rebound will depend on the sales outlook for 2024, not 2023.

Kim Young-geon, a senior researcher at Mirae Asset Securities Research Center, predicted in an interview with SK Hynix on the 20th, “The current overall deterioration in business conditions is expected to continue to some extent next year,” adding, “However, a turning point for a rebound will be reached in the second half of 2023.”

He was optimistic that the current oversupply would be sufficiently resolved over time, citing as a positive factor the fact that semiconductor manufacturers have announced plans to actively respond to inventory adjustments such as investment reductions and production cuts rather than engaging in a game of chicken.
Commissioner Kim said, “Demand for DDR5 replacement in the DRAM market for data center servers and demand for smartphone memory are expected to gradually recover,” adding, “As the size of new industries such as AI, big data, and metaverse grows, investment by hyperscalers is steadily increasing.”

dataThe DRAM market for center servers is attracting attention as the next-generation food source for the semiconductor market. With the increase in product shipments using communications and the exponential increase in digital content consumption, the increase in data traffic in the relevant market is inevitable. Accordingly, the demand for data centers from global IT companies such as Microsoft, Google, and Amazon is at an all-time high.

According to market research firm Omdia, demand for DRAM for data center servers is expected to exceed demand for mobile DRAM due to the surge in OTT and cloud usage. Commissioner Kim also explained, “As representative global hyperscalers Meta continue to announce aggressive metaverse industry investment plans, data traffic is also steadily growing,” and “As the size of the servers owned by hyperscalers continues to increase, related investments are bound to increase.”

On the other hand, according to the Samsung Electronics 4Q22 preview by Eugene Investment & Securities Research Center, the market's attention is already looking beyond 2023 to 2024. Researcher Seungwoo Lee expressed a negative opinion, saying, "Considering the unprecedented wave of inflation and rising interest rates, it seems difficult to reduce inventory at the level the market expects with a normal response."

However, he added, “If companies take proactive measures to reduce inventory, stock prices in 2023 will show a different pattern from the past two years.” Samsung Electronics' fourth quarter performance is expected to show a 5% decrease in sales and a 53% decrease in operating profit compared to the same period last year.
The key is the launch of Sapphire Rapids. Earlier, Commissioner Kim also emphasized that this is a 'signal flare for DDR5 demand promotion'. Intel's next-generation server CPU Sapphire Rapids, scheduled for release in January, is a new turning point in the memory semiconductor market. Sapphire Rapids is expected to drive DDR5 RAM demand by adopting a processor that supports PCIe Gen5 and next-generation DDR5 RAM.

It is also predicted that there will be a windfall in the NAND flash market due to the US-China hegemony competition. Chinese memory supplier YMTC was officially listed on the US Department of Commerce's 'Entity List' on the 15th. Accordingly, it is expected that there will be a blow to the production and sales of 3D NAND flash products.

According to market research firm TrendForce, “YMTC may abandon the 3D NAND flash market by 2024.” According to a report released on the 16th, “It is highly likely that YMTC will only operate in the Chinese domestic market in the future,” and predicted that “the opportunity to expand market share will be lost as the entry into advanced 3D NAND technology is seriously hindered due to this entity list listing.”

Meanwhile, SK Hynix recently announced that it has succeeded in developing a sample of the world's fastest server DRAM product, 'DDR5 MCR DIMM' for the first time in the world, and is focusing on expanding related markets such as developing next-generation DDR5 products as well as developing and releasing server DRAM products.