Memory chip industry Research Report

Release date：2015-02-03   Views：2027

1. Research logic: memory chip industry affects downstream manufacturers and the whole semiconductor industry

Memory chips account for 22% of the total output value of the semiconductor industry, nearly 1 / 3 of the wafer production capacity and capital expenditure, and the periodicity is stronger than the overall average value of the semiconductor industry, thus becoming the "wind vane" of the prosperity of the semiconductor industry. At the same time, investors are also concerned about the future development prospects of the memory chip industry after two years of prosperity. The research on memory chip industry not only helps to understand the cycle driving factors of this industry and even the whole semiconductor industry, but also provides reference for judging the future development of the industry.

2. Industry change: memory chip changes from the historical normal of ups and downs to the "new normal" of stable profit

In the past two years, however, the profits of storage companies have been rising sharply, but the profits have remained stable. We believe that the emergence of this stable profit "new normal" is mainly due to changes in three aspects, namely, the stimulation of downstream intelligent terminal demand, the oligopoly pattern formed by industry integration and merger, and the improvement of the difficulty of enterprises to expand production. Based on the analysis of the industry fundamentals, we believe that the steady profit state of enterprises is expected to continue to be maintained for a long time in the future, and the memory chip industry will turn from "cycle" to "long bull".

3. Outlook: DRAM will still maintain balance, NAND may have surplus

DRAM and NAND together account for more than 85% of the total output value of the memory chip industry. DRAM industry benefits from frequent bankruptcy, merger and integration in the past. At present, the pattern of oligopoly has been formed, and the industry supply is relatively controllable. Under the stimulation of PC and smartphone demand, we expect that the overall supply and demand ratio of DRAM in the future will be balanced or slightly in short supply. However, the NAND industry has not yet been effectively integrated, and the market is relatively scattered, so it is difficult for manufacturers to form effective self-discipline, and the whole industry has a large scale of expansion. In addition, the demand from SSD is uncertain, and the NAND industry is likely to return to overcapacity and price decline in the future.

4. Under the background of outsourcing industry in the future

Although the memory chip industry has been dominated by IDM manufacturers, under the background of product supply shortage and rising industrial investment, the risk of "fighting alone" mode is increasing, and IDM manufacturers are increasingly considering outsourcing part of the production and packaging and testing links. Licheng, Huadong and Taiji industries have become important packaging and testing outsourcing factories for memory chip manufacturers. In the context of the increasing proportion of storage chips, outsourcing business is increasing. We hope that Chinese mainland enterprises will get more outsourcing orders with the cost and the speed of supply in the local market. In the future, Chinese mainland is expected to produce similar memory leading enterprises such as Li.

5: Risk tips:

The results show that the downstream demand is lower than expected; the degree of production expansion is higher than expected; and major accidental events may lead to supply

1、 Research logic:

Memory is known as the "wind vane" of the semiconductor industry, accounting for 22% of the total output value of the semiconductor industry, and nearly 1 / 3 of the wafer production capacity and capital expenditure. As a representative of the pattern of heavy assets, strong cycle and oligopoly competition, the memory chip industry has always been concerned.

In history, the memory chip industry is a "cyclical stock", showing a huge fluctuation far higher than the average value of the semiconductor industry. The enterprises in the industry often enjoy a good time of large profits in the previous year, and then fall into the hell of huge losses the following year, suffering from the suffering of the industry cycle. In the past two years, the cyclical nature of the memory chip industry seems to have weakened. The revenue of related enterprises has grown rapidly and the profits have been stable. Meguiar and SK Hynix have also ranked among the top five global semiconductor enterprises in terms of revenue. At present, the industry has not yet entered a downward cycle. The storage chip industry has become a "Bull Stock".

The continuous high landscape of the memory chip industry also has a positive impact on the downstream manufacturers in the industry chain. Huayake, a Taiwan manufacturer of memory chips, has made record profits, and its share price has risen nearly 20 times in the past two years. Meanwhile, the monthly revenue of Licheng, which mainly focuses on memory packaging, is also at a historical high level in East China. On the mainland side, Taiji industry, as one of SK Hynix's main packaging plants, has also benefited from the shortage of memory capacity and the increase in the proportion of outsourcing packaging and testing. Recently, it is negotiating a new round of cooperation agreement with SK Hynix.

Because the profitability of manufacturers in each link of the memory chip industry chain is closely related to the prosperity of the industry, how to look at the future development of the memory chip industry has become a key issue in the current time point. We have launched a special report on the memory chip industry for investors' reference.

（1） This report mainly answers the following three questions:

1) What are the reasons for the ups and downs of the memory chip industry in history? Why has the cyclical nature of the industry weakened significantly in the past two years? It is not only helpful for us to understand the cyclical driving factors of memory chip and even semiconductor industry, but also a new perspective to understand other cyclical industries.

2) What is the future of memory chip industry? In other words, what methods or indicators can be used to judge when the industrial cycle will reverse?

3) What is the impact of the rapid development of memory chip industry on the industry chain? In particular, can memory packaging enterprises benefit from the prosperity of the industry?

Similar to the panel industry, memory chip is also an industry with huge output value, long-term huge investment, but it is likely that there will be no return in the short term. The background of domestic government led industry development is actually very suitable for the development of this industry. As an important part of the semiconductor industry, memory chip industry will also be one of the focuses of the development of domestic semiconductor industry in the future. From the domestic status quo, Zhaoyi innovation has emerged in the norflash market, Taiji industry has also become one of the important packaging plants of SK Hynix, and SMIC international is willing to make a comeback to enter the NAND flash memory market. Although there are no influential enterprises, we are excited by the development of domestic memory chip industry chain. We are optimistic about the future development of memory chip packaging industry in mainland China. In view of the continuous shortage of memory chips (especially DRAM), as well as the consideration of cost factors and shortening the delivery time, we believe that in the future, more outsourcing orders of memory chip packaging and testing will flow to mainland enterprises, and the mainland is expected to grow into a leading enterprise like Licheng.

（2） Memory chip: new demand stimulation + stable market structure, industry is expected to shift from "cycle" to "long bull"

DRAM and nandflash have become the main part of memory chip industry

Memory chip (memory) is a kind of semiconductor medium memory. The common memory, U disk, SSD (solid state disk) and so on all belong to the category of memory chip.

Memory chips can be divided into volatile memory and non-volatile memory according to whether the stored data will be lost after power failure. DRAM and nandflash are the representatives of these two kinds of memories respectively. Although there are many kinds of memory chips, DRAM and nandflash have become the main components of memory chip industry from the perspective of output value composition. According to IDC's statistics, the market size of memory chips in 2013 was nearly 69 billion US dollars, while DRAM and nandflash accounted for about 60 billion US dollars, accounting for more than 85%.

（3） In the history of the memory industry, it is a strong cyclical, and the ups and downs are the norm

Memory chip is a semiconductor product, which is governed by Moore's law. The price of the same product should be declining. But this is not the case. Historically, the memory industry has been in a cycle of rapid rise and fall, and its periodicity is obviously stronger than that of the semiconductor industry as a whole. Taking the contract price of DRAM and NAND mainstream products as an example, there have been cases in which the contract price of DRAM and NAND has decreased by nearly 50% or increased by nearly 100% in one year, and the profitability of memory enterprises has also shown significant cyclical changes.

There are three main reasons for the rise and fall of the memory industry

First of all, for a long time in the past, the application of memory was relatively single, mainly PC and server. The shipping cycle of these products led to the fluctuation of memory demand to a certain extent.

Secondly, the past market structure of memory industry is likely to lead to greater fluctuations in the industry. Before 2013, the global manufacturers capable of mass production of memory include Samsung, Meguiar, SK Hynix, Qimonda, erbida, etc., and any of them can have a greater impact on the market supply and demand. As long as a firm expands or reduces production substantially, the industry is prone to overcapacity or insufficient capacity. At the same time, as there are still 5-6 large factories, it is difficult for manufacturers to achieve "collusion" behavior. When one manufacturer expands its production, other manufacturers will usually follow suit, resulting in a greater degree of excess, resulting in the decline of product prices often exceeding expectations; when the industry is in the capacity contraction period, due to the opposite reasons, the final product price often exceeds the expected value The rise of the period. In short, the production capacity of the memory industry is relatively concentrated, but a single manufacturer can not control the market pattern of the whole industry supply, which makes the industry prone to ups and downs. Compared with the PC processor industry, Intel occupies more than 80% of the market share and can control the supply of the whole industry. Therefore, although the ASP of the processor shows a downward trend, the annual decline rate is relatively stable, and there is no sharp rise and fall in price.

Finally, another important reason for the fluctuation of memory industry is the product attributes of memory.

Memory is a product with a high degree of standardization. It is very difficult for each manufacturer to realize the differentiation of their products in order to form sufficient customer stickiness or obtain product premium. As a result, all manufacturers have the impulse to expand production capacity to "earn more" (the impulse to expand production) in the upward cycle of prosperity, while in the downward cycle, they have to constantly cut prices to clean up inventory (price reduction impulse), which is equivalent to "fueling the fire" and aggravating the cyclical fluctuations of the industry. In conclusion, the cycle of downstream demand, the pattern of market share concentration, and the standardization attribute of products have led to large fluctuations in the history of memory industry.

2、 Memory industry is expected to change from the historical normal of ups and downs to the "new normal" of stable profits

In the past two years, the profits of memory enterprises such as SK Hynix, Meguiar and huayake have increased significantly. The net profit of Meguiar in the fiscal year up to September 2014 has reached US $3.04 billion. The total net profit after tax of huayake and South Asia Technology in 2014 is expected to exceed NT $74 billion, both of which are the highest in the past 10 years. At the same time, although the prices of DRAM and nandflash fluctuated from time to time, there was no sharp rise and fall again.

We believe that the memory industry may have entered a "new normal", and there is no fear of large overcapacity in the whole industry for a long time, and relevant enterprises will be able to maintain stable and high-level profits. We believe that the emergence of this "new normal" is mainly due to some changes in industrial fundamentals

First of all, the downstream application range of memory has been greatly expanded. On the one hand, the rise of intelligent terminals has greatly increased the demand for memory, offsetting the impact caused by the sluggish sales of PCs in recent years, and on the other hand, it has also smoothed down the memory demand cycle caused by the PC shipping cycle.

Secondly, the continuous bankruptcy and M & A in the memory industry have resulted in the contraction of industrial capacity and the further improvement of industrial concentration. In 2008, the total market share of the top five manufacturers in the memory industry was about 75%. By 2013, this proportion had reached about 95%, and small and medium-sized manufacturers were basically eliminated. Major manufacturers have experienced huge losses caused by overcapacity in the past, so they are more cautious to expand their production, unlike small and medium-sized enterprises, which often take the lead in expanding production in order to seize market share in the past. In this way, the memory industry has maintained a relatively stable state for a long time.

Finally, the expansion of the memory industry has become more difficult than in the past. At present, the mainstream process of DRAM is 20nm ~ 30nm. NAND has entered the era of manufacturing process below 20nm. The investment in R & D and plant construction required by further reducing the process is greatly increased. It often costs billions of dollars to build new plants. Therefore, on the whole, memory manufacturers' willingness to expand production and capacity are not strong.

On the whole, memory manufacturers have tended to be cautious in expanding production in the future. Capital expenditure will maintain a moderate growth in the future. It is difficult for the industry to realize the situation of large overcapacity in the past, and manufacturers are expected to maintain stable profits for a long time in the future.

（1） DRAM has an optimistic outlook: under the oligopoly pattern, the supply of the industry can be controlled, and the demand driven by PC and mobile phone applications is strong

Benefit from the demand of mobile terminals, DRAM output value has reached a record high

DRAM is one of the most common memory components, and the common PC memory is DRAM. DRAM has become an indispensable component of PC, smartphone, tablet PC and server. With the continuous expansion of the scope of application, DRAM market size is also expanding. According to dramexchange, the output value of DRAM will increase by 33% to 46.6 billion US dollars in 2014, a record high. In 2015, it will increase by 16% to 54.1 billion US dollars.

From the perspective of downstream demand, mobile phone has gradually replaced PC as the main demand of DRAM. The proportion of the two is expected to be flat in 2014, and the demand of mobile phone DRAM will exceed that of PC in 2015.

（2） DRAM has entered a period of oligopoly due to continuous industrial integration

Due to the high technical difficulty and high capital expenditure of DRAM manufacturing, it is difficult for enterprises to survive. At the same time, DRAM industry is often in the process of rapid rise and fall. Enterprises often suffer huge losses during the downturn period, leading to bankruptcy or acquisition of some enterprises. Therefore, DRAM industry continues to be integrated And M & A. DRAM industry has a big cycle almost every 8 to 10 years. Finally, some large memory factories will exit, such as Ti and IBM in 1980s, and Toshiba, Hitachi and NEC in 1990s. In recent years, the integration of DRAM industry has been accelerated. Qimonda and Elpida, which were the second and third largest DRAM factories in the world, went bankrupt one after another, and the number of DRAM manufacturers decreased rapidly (erbida was later acquired by micron).

Up to now, there are only 3-4 enterprises left in DRAM industry, which has formed a "tripartite confrontation": Samsung is the market leader of DRAM, with a market share of about 40%; SK Hynix, one of the two storage giants in South Korea, is also strong, with DRAM's global share of nearly 30%; since its acquisition of erbida, Meguiar has greatly increased its production capacity, and then formed an alliance with Taiwan huayako to further expand its production capacity The market share is close to 25%, which is likely to be the third and catch up with the second. At present, the total share of the three major manufacturers is close to 95%. Most of the other small and medium-sized manufacturers transform to OEM or focus on some niche memory market.

Samsung maintains a leading position in scale and technology. In 2013, Samsung's DRAM revenue reached 12.6 billion US dollars, while in the first three quarters of 14 years, DRAM revenue has exceeded 13 years, reaching US $12.8 billion. The share of 14q3 Samsung in DRAM market is as high as 41.7%, and that in mobile DRAM market is more than 50%. Samsung is also the leading manufacturer in the 20nm process. Since October 2014, Samsung has been rampup the capacity of DRAM in 20nm process, and plans to produce at least 40% DRAM products in 20nm process by the end of 2015.

Sk Hynix is the second largest DRAM plant in the world, with a market share of 26.5% in 3q14. The annual revenue of 2013 was 9.35 billion US dollars, which reached 8.97 billion US dollars in the first three quarters of 14 years. As other mobile phone brand manufacturers are worried about the stability of Samsung's component supply, SK Hynix has become the biggest beneficiary, especially in the market share of mainland smart phone brand manufacturers. In September 2013, a fire broke out in SK Hynix Wuxi plant in China, which seriously affected the production capacity. However, the fire caused the price of DRAM to soar, which became the key factor to promote profits.

Meguiar was not as large as South Korea's two giants in scale. However, in recent years, through the merger and acquisition of irpida, which is on the verge of bankruptcy, and forming an alliance with Taiwan's Inotera, Meguiar's overall production capacity has increased by nearly 90%, which has the potential to catch up with SK Hynix, the second ranked company. According to dramexchange statistics, Meguiar's DRAM revenue after the merger with erbida was $9.46 billion in 2013, and reached $8.37 billion in the first three quarters of 2014. At present, Meguiar's DRAM process is still mainly at 30nm and 25nm, while the 20nm process mainly relies on huayake and irpida.

The scale of DRAM manufacturers in Taiwan is relatively small, unable to compete with the top three, and they have missed the good opportunity of acquiring Qimonda and erbida to become bigger. Therefore, most DRAM manufacturers in Taiwan have transformed into OEM memory factories or focus on niche memory market. Huayako has become Meguiar's DRAM OEM. Due to the good bargaining structure with Meguiar, huayako has become one of the best profitable manufacturers in DRAM plants, with the operating profit margin of 14q3 as high as 53.2%; Li Jing has also been transformed into a OEM, but it is difficult to enjoy the benefits brought by the rising DRAM price; the company mainly produces niche memory and has made relatively stable profits in recent years.

3、 DRAM supply and demand is expected to maintain a balance, sustained stability, profit is still expected

（1） Cautious attitude to expand production + difficulty in expanding production, and DRAM capacity is difficult to increase significantly

DRAM manufacturers, on the one hand, are more cautious in expanding production and are reluctant to expand production. Under the current supply and demand pattern, the three DRAM giants have made great profits. The manufacturers still remember the huge losses caused by the struggle for expansion of production in the past. The manufacturer has the motive force to maintain the current market situation, and the willingness to expand production is not strong. At present, the three manufacturers have reached a certain degree of tacit agreement, forming an anonymous "no expansion agreement". Although the expansion plan of Samsung Hynix SK is mainly from the perspective of the expansion and expansion plan of Samsung Hynix sk. Samsung has not yet made clear what new capacity will be used for, but it also tries to calm market sentiment and says it will adjust capacity to market conditions.

On the other hand, compared with the past, DRAM expansion is also greatly difficult. Investment in high-end processes is greater. 12 inch factories have invested between $3-4 billion, increasing investment risk. At the same time, there are more production steps of high-end technology, more machines are needed and more space is occupied. Therefore, if manufacturers do not want to expand their production capacity, they must increase their production capacity. For example, the capex of meguang over the past three years has been largely spent on process upgrades rather than capacity expansion. From IDC statistics, we can also see that the global DRAM chip capacity is showing a small decline trend.

We believe that in the next two years, DRAM supply is difficult to have a large excess, and in the next two years, DRAM supply is difficult to appear large excess.

（2） DRAM demand of PC and mobile phone increased, DRAM supply and demand remained balanced

Driven by PC and mobile phone demand, DRAM demand will continue to grow strongly in the future

First of all, with the PC operating system from 32-bit to 64 bit, the demand for memory is greatly increased, and it is often necessary to upgrade from 4GB memory to 8GB or even 16GB memory. Therefore, although PC shipment does not improve greatly, the demand for memory is expected to remain strong;

Secondly, mobile phone demand will become the biggest influencing factor in DRAM market. Mobile phone has a large shipping volume, and the capacity of carrying DRAM has been improved rapidly. According to IDC statistics, the average capacity of DRAM on mobile phones in 2014 has reached 0.9gb, an increase of 0.2gb compared with the same period last year. If the average DRAM capacity of mobile phones is increased by 0.1gb in 2015, the increment will reach 2GB, accounting for about 3% of the global DRAM capacity, based on the 2 billion mobile phone shipments in 2015. Under the current supply, DRAM will be in short supply. In addition, Apple's iPhone has not upgraded its memory capacity for a long time, which has lagged behind the upgrade progress of Samsung and other manufacturers. In the future, if the iPhone upgrades from 1GB memory to 2GB, the demand will increase by about 3% in view of the nearly 200 million iPhones shipped. Therefore, mobile phone demand has a significant impact on DRAM supply and demand.

From the perspective of supply and demand, DRAM has changed from overall surplus a few years ago to a state of shortage. As the supply oligopoly structure remains unchanged, the industry supply is controllable, and the demand for DRAM from PC and mobile phones is still strong, we expect DRAM will remain in a slight shortage in the next two years. From the perspective of the industry, Taiwan's memory module factory Weigang and niche memory factory Yuchuang are also optimistic that the DRAM market will remain healthy in 2015.

（3） There may be hidden worries in nandflash: the market dispersion leads to the expansion of production, and the biggest uncertainty on the demand side is SSD

Smartphone and SSD become the biggest demand of nandflash

Due to the increasing demand for large capacity and high-speed storage, the capacity of smart phones equipped with nandflash is growing rapidly, and SSD is also favored in PC. Smart phones and SSDs have become the main demand for nandflash, accounting for nearly 70% in 2014.

According to dramexchange, the total revenue of nandflash manufacturers (excluding SanDisk) is expected to reach $24.6 billion in 2014, and will increase by 12% to $27.6 billion in 2015.

（4） The continuous merger and acquisition did not lead to industrial integration, and nandflash market was relatively scattered

Different from DRAM, the number of nandflash manufacturers is slightly larger, and the market share is also relatively scattered. Therefore, the fluctuation of nandflash industry is smaller than that of DRAM Industry in history.

Although in recent years, mergers and acquisitions have occurred frequently in NAND industry, but they are mainly concentrated on flash memory control chips and enterprise level solutions, and there is no effective integration among the main NAND manufacturers.

From the current market situation, the main manufacturers of NAND industry include Samsung, micron, Toshiba, SK Hynix, Intel, etc.

Samsung also plays an important role in NAND market, with a share of about 35%, and its growth rate is higher than the average level of the industry. With the completion and operation of Xi'an factory in China, its future advantages will be consolidated;

Toshiba and Sandi formed an alliance to produce NAND, which is second only to Samsung, with a market share of nearly 30%;

Sk Hynix is relatively weak in NAND market, with a market share of about 12%. After being affected by the fire in 2013, SK Hynix converted part of its NAND production lines to DRAM production, but now it has all switched back to NAND production;

In addition to its own factory buildings, Meguiar also built a joint venture factory with Intel to produce NAND. The technology progress is relatively smooth, and its market share in NAND is about 15%.

（5） SSD development uncertainty is strong + manufacturers compete to expand production, NAND may have surplus in the future

In terms of demand, the demand for nandflash of smart phones keeps growing rapidly, but SSD becomes the biggest uncertainty factor. At present, the price of SSD per GB is still several times higher than that of ordinary disk (HDD), and its attraction in the consumer market is limited. At the same time, in the enterprise market and data center applications, due to the doubts about the stability and life of SSD, the future storage demand of this kind of market will still be mainly HDD. If SSD development is not as expected, then the demand growth of the whole NAND market is bound to be greatly reduced.

From the supply side, due to the relatively dispersed NAND market, it is difficult for manufacturers to form effective self-discipline, so they have expanded production in recent two years. For example, the FAB5 factory jointly established by Toshiba and SanDisk, and the Fab7 factory of Meguiar in Singapore have increased their nandflash capacity to 1.5-2 times. In the past two years, the wafer output of the entire NAND industry has been on the rise. In addition, the number of single wafer chips produced by the progress of process technology has increased, and the actual growth of overall NAND bit capacity is faster.

From the overall supply and demand situation of NAND, it has been showing a slight surplus in recent years. With the substantial expansion of production capacity of major manufacturers, overcapacity will be further aggravated, and NAND industry will not be optimistic in the future.

In summary, in terms of demand, due to the different main driving forces of downstream demand, the future demand growth of DRAM and NAND is different; in terms of supply, due to the different market structure, NAND manufacturers expand their production much more than DRAM manufacturers. The final result is that DRAM is expected to maintain a balance between supply and demand in the next two years, or even a slight shortage of supply, while NAND market may return to the situation of overcapacity and price decline.

4、 Memory industry chain: pay attention to the increasing trend of outsourcing proportion

（1） The memory industry is dominated by IDM manufacturers

In the memory market, Samsung, SK Hynix and Meguiar are all IDM manufacturers. They all have their own wafer manufacturing plants and packaging and testing plants. The industrial layout is quite perfect, and there are almost no independent fabless manufacturers in the whole memory industry. The reasons are mainly due to the geographical distribution of enterprises and technical factors

On the one hand, Korean manufacturers account for a large proportion of the memory industry, and Korean enterprises tend to prefer to form a vertically integrated whole industry chain layout. American Meguiar's industrial chain openness is significantly higher than that of South Korea's two major manufacturers.

On the other hand, the memory industry is characterized by the combination of manufacturing process and production capacity, so as to reduce the cost and ultimately win the market. Therefore, the production and manufacturing capacity is the core competitiveness of memory manufacturers, which are often strictly controlled by manufacturers. Outsourcing of memory manufacturing is rare.

IDM led mode makes it difficult for other manufacturers in the industrial chain to benefit from the development of memory industry for a long time. Take South Korea as an example. At present, Samsung and SK Hynix together account for about 65% of the global memory market, and most of the production capacity is in South Korea. However, the scale of Korean sealing and testing plants is generally relatively small, and the total revenue of the top four manufacturers only accounts for 2% - 3% of the global market.

（2） The outsourcing proportion of IDM manufacturers is expected to increase, benefiting the later packaging manufacturers

With the increase of the complexity of memory chip production and the increase of investment, the risk of "fighting alone" mode is also increasing. Memory manufacturers are more and more considering to spread the risk by means of joint venture and outsourcing. At the same time, due to the continuous shortage of DRAM capacity, manufacturers are also motivated to outsource some orders in order to ensure timely supply. At present, memory manufacturers are seeking outsourcing and cooperation in wafer manufacturing and packaging and testing.

From the perspective of memory sealing and testing pattern, Taiwan manufacturers are mainly facing non Korean memory customers, such as Meguiar, Toshiba and huayako. With the help of memory packaging, Licheng has become the fifth largest packaging factory in the world (in 2013); due to its local advantages, Korean manufacturers have obtained some outsourcing orders from Samsung and SK Hynix; in the mainland, Taiji industry has become SK Haili By the end of June 2014, Taiji's highest output of packaging and packaging testing had reached 467 million pieces / month (1geq) and 370 million pieces / month (1geq), respectively. By contrast, the global capacity of DRAM and nandflash was about 400-500 million GB and 4-5 billion GB respectively in 2014.

From the perspective of the prosperity of the memory sealing and testing industry, although the monthly revenue of Taiwan stock Licheng and East China declined slightly, they are still at a historical high level, indicating that memory manufacturers continue to release outsourcing sealed test orders.

Memory packaging has the characteristics of large quantity, high degree of standardization, and the technical requirements are lower than that of logic IC. At the same time, the mainland is also the gathering place of many mobile phone and PC manufacturers, which has a strong demand for memory chips. We are optimistic about the future development of the mainland storage chip packaging and testing industry.

Considering the cost factors and shortening the delivery time, we believe that more storage packaging and testing orders will flow to mainland enterprises in the future, and it is expected to grow into a leading storage packaging and testing enterprise similar to Licheng.

5、 Risk tips

The results show that the downstream demand is lower than expected; the expansion of production exceeds the expectation; the major accidental events may lead to changes in supply and demand

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