According to the latest TrendForce research, pandemic-induced materials shortages abated in the second half of this year and the supply and delivery of short-term materials has recovered significantly. However, assuming materials supply is secure and demand can be met, the annual growth rate of server shipments in 2023 is estimated to be only 3.7%, which is lower than 5.1% in 2022.

TrendForce indicates that this growth slowdown is due to three factors. First, once material mismatch issues had eased, buyers began adjusting previously placed purchase order overruns. Thus, ODM orders also decreased but this will not affect the 2022 shipment volume of whole servers for the time being. Second, due to the impact of rising inflation and weakness in the overall economy, corporate capital investment may trend more conservative and IT-related investment will emphasize flexibility, such as the replacement of certain server terminals with cloud services. Third, geopolitical changes will drive the continuing emergence of demand for small-scale data centers and previous construction of hyperscale data centers will slow. The recent ban on military/HPC servers issued by the U.S. Department of Commerce on October 7 has a very low market share in terms of its application category, so the impact on the overall server market is limited at present. However, if the scope of the ban is expanded further in the future, it will herald a more significant slowdown risk for China's server shipment momentum in 2023.

Affected by tight wafer supply, lead time for SSD controller IC and PMIC components was prolonged to 32 weeks in 2021. All controller IC suppliers generally give priority to supplying NAND Flash manufacturers, so production at module factories could not meet SSD demand in the retail market during that time. In 2H21, the supply of SSD-related components improved quarter by quarter and various module manufacturers boosted their SSD shipments in order to upsurge their annual performance. According to TrendForce research, SSD shipments through global distribution channels reached 127 million units in 2021, with an annual growth rate of 11%.

This global SSD ranking is based on the shipment volume of module houses' own in-house brands in the distribution channel market as a standard for calculation and NAND Flash manufacturers are not included. NAND Flash manufacturer supply accounts for approximately 42% of the overall distribution channel market while module factory shipments account for approximately 58%. When SSD-related components were hard to come by, NAND manufacturers' supply chain management occupied a superior position compared to module houses, so NAND manufacturers' market share in the overall distribution channel market increased compared with 2020.

In September, we reported that Apple, the world's most valuable company, would source some of its 3D NAND flash chips from the Chinese Yangtze Memory Technologies Corp (YMTC). However, according to the latest political pressure from the US government, Apple has reportedly canceled any contracts with the Chinese company and will not include their 3D NAND chips in the production of iPhones, iPads, and Mac computers. Even with YTMC's Xstacking 3.0 six-plane architecture that provides triple-level cell storage with I/O speeds of 2400 MT/s, Apple is not going to source any NAND Flash memory as US-China political relationship gets tighter regulations.

However, this could not be a deal breaker for both companies, as NAND Flash is in high demand, and new clients will emerge. As for Apple, the company has contracts with Kioxia, SK Hynix, Samsung, and possibly others that will ensure a steady supply of storage for the company's solutions.

SK hynix Inc. announced today that the U.S. government has clarified its position with respect to its latest export control regulations, issued by the U.S. Department of Commerce's Bureau of Industry and Security (BIS) on Friday, October 7, 2022. In an official letter from BIS, the agency assured SK hynix that the company, as well as its current suppliers and business partners, is still authorized to engage in activities necessary to maintain current production of integrated circuits in China for one year without further licensing requirements.

"Our discussions with the Department of Commerce led to an approval to supply equipment and items needed for development and production of DRAM semiconductors in Chinese facilities without additional licensing requirements," the company said. The new rules require a license for export, re-export or transfer (in-country) to China items including manufacturing equipment and support for DRAM chips 18 nm and below, NAND chips with 128 layers or more and logic chips 14 nm and below.

According to a TrendForce investigations, memory pricing began to decline from 4Q21 due to weakening demand for certain consumer electronics. Coupled with the impact of rising inflation, the Russian-Ukrainian war, and pandemic policies, demand in peak season was weak, resulting in inventory pressure that has extended from the buyer side to manufacturers. In response to the aforementioned situation, Micron announced last week that it would cut production of DRAM and NAND Flash, becoming the first major memory manufacturer to officially reduce its capacity utilization plan. In terms of NAND Flash, the market situation is more severe than that of DRAM. As the average contract price of mainstream capacity wafers has fallen to their cash cost and is approaching the periphery of selling at a loss for various manufacturers, Kioxia also announced that it will reduce NAND Flash capacity utilization by 30% from October on the heels of Micron's announcement.

In terms of DRAM, current contract pricing remains higher than the total production cost of various mainstream suppliers. Therefore, compared with NAND Flash, it remains to be seen whether there will be a significant reduction in production. In addition to mentioning the slight reduction in capacity utilization in this sector currently, Micron mainly emphasized its sharp downward revision of capital expenditures in 2023 and that the annual growth of DRAM production bits next year will only be around 5%. TrendForce believes, according to Micron, to actualize such conservative bit growth means that there is still room for a significant downward revision in capacity utilization and the extent to which Micron's subsequent production reductions are implemented remains to be seen.

The economic downturn keeps pushing the PC and related manufacturing markets down, following slumps in demand stemming from increased cost of living, the veritable arms race to technological products during COVID-19, and manufacturer's efforts to increase output to provide enough product to meet said demand. But all that goes up must eventually come down, and now South Korean manufacturers are facing the result of months of decreased consumption, with stock levels increasing ahead of actual product uptake (stocks have reached 67.3% of produced goods and factory shipments have declined 20.4%). This has now led to a 1.7% decline in August's output when compared to the same period last year - the first time the South Korean industry has seen negative growth since 2018.

Samsung and Kioxia both have announced a reduction in production output in the months to come, which should give distribution enough time to clear some of the accumulated inventory. The scales of production typically occur in cycles - ones with excess manufacturing against demand, and other times where the reverse happens. It seems we're now in the descending part of the spectrum, with prices - especially of NAND - being expected to drop in the coming months. It will take a while until the manufacturing reduction makes itself felt in the overall IC pricing landscape. Micron too has announced it's slowing down the production ramp-up of its 232-layer 3D NAND so as not to contribute in excess towards an already over-saturated market.

Cloud storage provider Backblaze is one of the industry players providing insightful reports into the health and reliability of the storage mediums they invest in to support their business. In its most recent report, the company shared data that may finally be pointing towards the general perception (and one of SSD's call to fame upon their introduction): that they boast of higher reliability and lower failure rates than HDDs.

The company's latest reports shows that SSDs have entered their fifth operating year without an escalation in failure rates: something that seems to plague HDDs pretty heavily starting from year 4. The idea is simple: SSDs should be more reliable because there are no moving part (no platters and no read/write heads that can fail). However, SSDs do have other points of failure, such as NAND itself (the reason there's TBW ratings) or its controller. Backblaze's data does however show that those concerns may be overrated. Of course, there's a chance that SSDs employed by Backblaze will hit a "reliability" wall of the sort that HDDs seem to enter in year four of their operation, where failure rates increase immensely. More data throughout a larger span of time will be welcome, but for now, it does seem that SSDs are the best way for users to keep their data available.

As reported by BusinessKorea, Apple, one of the largest companies in the world, will source its 3D NAND from Chinese memory maker Yangtze Memory Technologies Corp (YMTC). Known for supplying 3D NAND to Chinese SSD makers, YTMC's reported contract with Apple will fuel the upcoming iPhone 14 SKU manufacturing. Whether or not this partnership will expand to other products, it is essential to have as many storage sources as possible, as Apple sells millions of devices per year. YTMC is on track to deliver 3D NAND flash with the latest Xstacking 3.0 six-plane architecture that provides triple-level cell storage with I/O speeds of 2400 MT/s.

YTMC has joined the list of 3D NAND flash vendors that Apple works with, including SK Hynix, Samsung, Kioxia, and possibly others. This partnership also highlights that the Chinese memory output is sufficient and significant enough to break into more markets worldwide, not remaining exclusive to domestic use.

According to the latest TrendForce investigations, moving into the second half of 3Q22, the lack of a peak season has led to a delay in inventory destocking. Transactions in the NAND Flash market have been frosty. Buyers are watching passively and tend not to negotiate pricing. Pressure on factory inventory has reached a breaking point and manufacturers are bottoming out pricing in order to make a deal. This move will lead to a further decline in manufacturer pricing. TrendForce once again revises downward 3Q22 NAND Flash wafer contract prices and the decline of pricing is estimated to balloon to 30-35% from the original estimate of 15-20%.

In the past two years, the pandemic has promoted digital transformation and notebook computers and servers have stimulated rapid growth in NAND Flash consumption. In order to satisfy demand, manufacturers have been expanding aggressively, with their processes accelerating the output of 128-layer+ products. However, the 2H22 NAND Flash market situation has deteriorated sharply with the acute correction in purchase order demand for smartphones and laptops indicative of a market oversupply. Looking forward to 2023, the conservative attitudes of various consumer electronics brands may lead to difficulties in improving market conditions in the next year and stimulate suppliers to step up efforts to seize market share.

MaxLinear, Inc, a leading provider of radio frequency (RF), analog and mixed-signal integrated circuits, and Silicon Motion Technology Corporation (NasdaqGS: SIMO) ("Silicon Motion"), a global leader in NAND flash controllers for solid state storage devices, today announced that at Silicon Motion's extraordinary general meeting (the "EGM") of shareholders, held on August 31, 2022, shareholders of Silicon Motion approved the previously announced merger agreement under which MaxLinear will, subject to the terms and conditions thereof, acquire Silicon Motion, and approved other proposals related to the transaction.

More specifically, at the EGM, securityholders of Silicon Motion approved, by the requisite vote, the acquisition of Silicon Motion by MaxLinear, including the approval of: (a) the Agreement and Plan of Merger, dated May 5, 2022 (as it may be amended from time to time, the "Merger Agreement"), by and among MaxLinear, Shark Merger Sub, an exempted company incorporated and existing under the laws of the Cayman Islands and a wholly-owned subsidiary of MaxLinear ("Merger Sub"), and Silicon Motion, pursuant to which Merger Sub will merge with and into Silicon Motion with Silicon Motion continuing as the surviving company and becoming a wholly-owned subsidiary of MaxLinear (the "Merger"); (b) the plan of merger required to be filed with the Registrar of Companies in the Cayman Islands; (c) the Merger itself, on the terms and subject to the conditions set forth in the Merger Agreement; and (d) all other transactions and arrangements contemplated by the Merger Agreement.

According to TrendForce research, material supply improvement and spiking demand for enterprise SSDs from North American hyperscale data center and enterprise clients in 2Q22 coupled with the Kioxia contamination incident in 1Q22 prompted customers to ramp up procurement to avoid future supply shortages. Manufacturers also give priority to meeting the needs of server customers due to the high pricing of enterprise SSD. In the second quarter, overall revenue of the enterprise SSD market increased by 31.3% to US$7.32 billion.

As the market leader, Samsung has grown its enterprise SSD revenue to US$3.26 billion with the recovery of enterprise SSD procurement. Especially in the second quarter, when orders for other consumer products continued to decline, enterprise SSD became the company's outlet for reducing production capacity. At present, Samsung has been continuously investing in the development of next-generation transmission specification products such as the CXL 2.0 product released at the Flash Summit in early August, in order to maintain a leading position in the market.

Samsung Electronics Co., Ltd., the world leader in advanced memory technology, today announced the 990 PRO, the company's high-performance NVMe SSD based on PCIe 4.0. Delivering lightning-fast speeds and superior power efficiency, the new SSD is optimized for graphically demanding games and other intensive tasks including 3D rendering, 4K video editing and data analysis.

"With continuing innovations in gaming, 4K and 8K technology as well as AI-driven applications, consumers' need for high-performance storage is growing exponentially," said KyuYoung Lee, Vice President of the Memory Brand Product Biz Team at Samsung Electronics. "The 990 PRO provides an optimal balance of speed, power efficiency and reliability, making it an ideal choice for avid gamers and creative professionals seeking uninterrupted work and play."

According to TrendForce, DRAM market demand bit growth will only amount to 8.3% in 2023, sub-10% for the first time in history, and far lower than supply-side bit growth of approximately 14.1%. Data indicates the DRAM market to be severely oversupplied at least in 2023 and prices may continue to decline. NAND Flash is still in a state of oversupply and, although prices are expected to fall in the first half of next year, NAND Flash has built-in price elasticity compared to DRAM and average prices are expected to stimulate density growth in the enterprise SSD market after declining for several consecutive quarters. Demand bits are expected to grow by 28.9%, while supply bits will grow by approximately 32.1%.

From the perspective of various applications, rising inflation continues to impact demand in consumer markets, so the primary goal of memory brands has been to prioritize inventory correction. Especially in the past two years, a shortage of upstream components caused by the pandemic led memory brands to overbook purchase orders while sluggish sales on the distribution channel side have resulted in slow depletion of current notebook inventory, resulting in a further weakening of notebook demand in 2023. In terms of PC DRAM, the proportion of DDR4 and LPDDR4X in PC applications will fall further while the penetration rate of LPDDR5 and DDR5 continues to rise. However, the price premium of DDR5 will limit the growth of density in PCs. DRAM density in PCs is estimate to increase by approximately 7% annually in 2023. If manufactures cut DDR5 pricing more aggressively next year, installed capacity may be driven up to 9%, depending on whether DDR5 price concessions can be effectively reconciled with DDR4.

During this year's Flash Memory Summit, Phison, a company known for SSD controllers and now flash drives, demonstrated a system running AMD Ryzen 7000 series processors based on Zen 4 architecture. What is interesting about the shown specification is that the system was running an engineering sample of an upcoming Zen 4-based CPU with the latest storage technologies at impressive speeds. Using a Phison PS5026-E26 SSD controller, also called E26, the PCIe 5.0 SSD is powered by Micron's latest 232-layer TLC NAND flash. This new NAND technology will also bring greater densities to the market by promising higher endurance, higher read/write speeds, and better efficiency.

With AMD's upcoming AM5 platform, support for PCIe 5.0 SSDs is a welcome addition. And we today have some preliminary tests that show just how fast these SSDs can run. In CrystalDiskMark 8.0.4, it achieved over 10 GB/s in both read and write. We know that the E26 controller is capable of 12 GB/s speeds, so more fine-tuning is needed. Being an early sample, we expect final specifications to be better. The system is powered by an engineering sample of a six-core, twelve-threaded Zen 4 CPU running at unknown clocks, codenamed 100-000000593-20_Y. We can expect to see more of this technology once AMD's AM5 platform lands and Phison-powered SSDs hit the shelves in September.

YMTC today at the Flash Memory Summit (FMS) 2022 unveiled its X3-9070 TLC 3D NAND flash powered by Xtacking 3.0 architecture. Since its debut show at FMS 2018, YMTC's Xtacking technology has become a hallmark of the company's vision for innovation, and the approach to hybrid bonding has been widely recognized as one of the key enablers of the industry's future growth. Built out to be a common growth platform that drives value and innovation in the semiconductor ecosystem, YMTC's Xtacking 3.0 architecture opens up a world of opportunities for diversified applications in 5G, AloT, and beyond.

From 1.0 to 3.0, YMTC's Xtacking technology, a heterogeneous 3D integration architecture, has established a proven track record of success, as evidenced by a diverse portfolio of Xtacking NAND-based system solutions, including SATA III, PCIe Gen3 & Gen4 SSDs, as well as eMMC & UFS for mobile and embedded applications, garnering recognition from leading OEMs.

Samsung Electronics, the world leader in advanced memory technology, today unveiled an array of next-generation memory and storage technologies during Flash Memory Summit 2022, held at the Santa Clara (California) Convention Center, Aug. 2-4. In a keynote titled "Memory Innovations Navigating the Big Data Era," Samsung spotlighted four areas of technological advancement driving the big data market—data movement, data storage, data processing and data management—and revealed its leading-edge memory solutions addressing each field.

To maximize data center efficiency in an increasingly data-driven world, Samsung introduced a next-generation storage technology, "Petabyte Storage." The new solution will allow a single server unit to pack more than one petabyte of storage, enabling server manufacturers to sharply increase their storage capacity within the same floor space with a minimal number of servers. High server utilization will also help to lower power consumption.

SK hynix Inc. announced today that it has developed the industry's highest 238-layer NAND Flash product. The company has recently shipped samples of the 238-layer 512Gb triple level cell (TLC) 4D NAND product to customers with a plan to start mass production in the first half of 2023. "The latest achievement follows development of the 176-layer NAND product in December 2020," the company stated. "It is notable that the latest 238-layer product is most layered and smallest in area at the same time."

The company unveiled development of the latest product at the Flash Memory Summit 2022 in Santa Clara. "SK hynix secured global top-tier competitiveness in perspective of cost, performance and quality by introducing the 238-layer product based on its 4D NAND technologies," said Jungdal Choi, Head of NAND Development at SK hynix in his keynote speech during the event. "We will continue innovations to find breakthroughs in technological challenges."

This week at the Flash Memory Summit Conference & Expo, KIOXIA America, Inc.—along with the entire industry - will celebrate an important milestone: the 35th anniversary of its invention of NAND flash memory. While looking back at the transformative technology it invented back in 1987, KIOXIA also has its eyes on the future, defining what's next for flash by introducing innovative new products, form factors, and solutions. At FMS, the company will highlight how it is using flash memory to drive advancements and improvements in a wide variety of applications, including mobile computing, the edge, the cloud, data centers and automotive.

KIOXIA's Scott Nelson, executive vice president and chief marketing officer and Shigeo (Jeff) Ohshima, technology executive, SSD Application Engineering will jointly present a keynote session titled: "KIOXIA: 35 Years of Flash & Beyond." The session will highlight the 35th Anniversary of the invention of flash memory and will look forward to how KIOXIA is driving the future of this game-changing technology.

Micron Technology, Inc. (NASDAQ: MU) commends and thanks the Biden Administration for their leadership and the bipartisan work of Congress for passing the "Chips and Science" legislation. This is a big step towards securing the future of semiconductor manufacturing in the United States and advancing American innovation and competitiveness for years to come.

This legislation will bring leading-edge semiconductor manufacturing to the U.S., creating tens of thousands of jobs and tens of billions of dollars of new investments - transforming U.S. semiconductor innovation and supply chain resilience.

Silicon Motion Technology Corporation ("Silicon Motion"), a global leader in designing and marketing NAND flash controllers and solid-state storage devices today announces MonTitan, a PCIe Gen5 SSD solution platform perfectly suited for the most challenging Datacenter and Enterprise applications. Silicon Motion's new MonTitan platform features an entirely new, purpose-built ASIC and FW architecture, optimized for performance and QoS. Its unique Layered FW stack enables the development of customer differentiated solutions with a high degree of flexibility and accelerated time to market, all while reducing engineering cost.

"SSD storage solutions are evolving to address new challenges in data centers which demand changes in storage platforms and operating models," said Nelson Duann, Silicon Motion's Senior Vice President of Marketing and R&D. "Our MonTitan SSD solution is an innovative PCIe Gen5 SSD platform designed to satisfy the unique demands of datacenters today while providing flexibility and programmability to meet future evolving standards."

Micron Technology, Inc., today announced that it has begun volume production of the world's first 232-layer NAND, built with industry-leading innovations to drive unprecedented performance for storage solutions. It features the industry's highest areal density and delivers higher capacity and improved energy efficiency over previous generations of Micron NAND, to enable best-in-class support of the most data-intensive use cases from client to cloud.

"Micron's 232-layer NAND is a watershed moment for storage innovation as first proof of the capability to scale 3D NAND to more than 200 layers in production," said Scott DeBoer, executive vice president of technology and products at Micron. "This groundbreaking technology required extensive innovation, including advanced process capabilities to create high aspect ratio structures, novel materials advancements and leading-edge design enhancements that build on our market-leading 176-layer NAND technology."

According to TrendForce, market oversupply intensified in 2Q22 due to lagging demand and continued NAND Flash output and process advancement. The market consensus is a disappointing 2H22 peak season for consumer electronics including notebooks, TVs, and smartphones. Material inventory levels continue to rise and has become a risk to the supply chain. Due to slow destocking among distributors and a conservative stocking approach among clients, inventory problems have bubbled over upstream onto the supply side and sellers are under increased pressure to sell. TrendForce estimates, due to the rapid deterioration of the balance between supply and demand, the drop in NAND Flash pricing will expand to 8~13% in 3Q22, and this decline may continue into 4Q22.

In terms of Client SSD, due to weak consumer demand, various PC brands have significantly reduced their purchase order volume in 3Q22 in order to digest 1H22 SSD inventory. As suppliers shift focus to 176-layer client SSD, 176-layer QLC SSDs have begun to ship, and YMTC looks to expand shipment of notebook client SSDs in 2H22, price competition has become increasingly fierce, forcing manufacturers to increase price concessions to incentivize clients to up order volume. Thus, the decline in client SSD pricing is expected to expand to 8~13% in 3Q22.

Phison Electronics Corp., a global leader in NAND flash and storage solutions, and Cigent Technology, Inc., the leader in embedded cybersecurity technology, today announced an innovative partnership program called Cigent Secure SSD Ready. This strategic partnership embeds select Phison storage devices and controllers with Cigent's built-in cybersecurity enhancements - features that Phison's storage partners can easily switch on and resell as an option to their global channel partners and customers.

"We couldn't be more excited about our exclusive partnership with Cigent to equip selected Phison products with the most secure storage solution on the market," said Sebastien Jean, CTO, Phison. "Phison OEM partners and PC OEMs now have a turnkey solution that provides unparalleled storage-based data security across the entire storage ecosystem/PC supply chain."

According to TrendForce research, as output from Kioxia and WDC grows month by month, it has become obvious that production capacity is sufficient to meet increased bit demand. However, post-pandemic demand for consumer electronics such as laptops will no longer lead to flagging orders. Coupled with slow destocking among Chinese smartphone brands due to the pandemic and rising inflation, these factors will lead to oversupply in the 3Q22 NAND Flash market, in turn affecting a price drop of 0~5% in 3Q22.

In terms of Client SSD, although a backstop for business notebook orders remains, demand for consumer notebook and Chromebook orders lags behind 2021, especially as PC brands stock more conservatively. Their intention to actively reduce inventory is obvious and the volume of orders in peak season may fall behind last year. However, as SSD production capacity gradually returns to normal, supply of client SSDs continues to increase. In addition, shipments of Kioxia and WDC products been delivered in succession. In order to avoid a sharp increase in inventory, the supply side is willing to let prices spike. Client SSD pricing is expected to reverse direction and move downwards approximately 3-8% in 3Q22.

Phison Electronics Corp., a global leader in NAND flash controller and storage solutions, today unveiled two new PCIe Gen4x4 Enterprise Class SSDs: the EPR3750 in M.2 2280 form factor and the EPR3760 in M.2 22110 form factor. The EPR3750 and EPR3760 SSDs are backward compatible in PCIe Gen3 M.2 slots at even faster speeds while offering significant performance enhancements when matched with PCIe Gen4 chipsets. Also, the EPR3750 and EPR3760 SSDs provide a faster quality of service (QoS) command execution with Enterprise SSD firmware. Workstation and Server boot applications require consistent and predictable performance from storage. Phison's new SSDs are ideal to use as boot drives in workstations, servers, and in Network Attached Storage (NAS) and RAID environments.