Asia Memory-Bad memories fading

TMT
Memory Devices Technology
8 October 2010
abc
bring NAND capex/sales to 50%, still well below
the 2005-8 average level of 67%. Other than
accelerated process migration, we expect Samsung
to expand its NAND production capacity probably
at Fab 16, which we expect to be online next year,
to compete with Toshiba’s new NAND fab (Fab 5)
at its facility in Mie Prefecture, Japan; this is
expected to come online in spring 2011.
Global NAND capex (USDm)
14,000
12,000
10,000
8,000
6,000
4,000
2,000
-
Source: Gartner, HSBC forecasts
2009 2010f 2011f 2012f
Total (HSBC) y-o-y (%)
200%
150%
100%
50%
0%
-50%
-100%
We are not alarmed by this increase. Based on our
capacity assumptions for these two major new
fabs and process migrations for the major vendors,
we expect 2011 supply-demand balance to be
similar to this year’s, at 99.6%. We expect waferdriven
NAND capacity additions to hit in earnest
during 2H11, by which time we believe strong
demand growth can absorb the extra production.
Indeed, we expect a major shortage of supply by
next year, if Toshiba’s new Fab 5, and as appears
possible, Samsung’s Fab 16 do not come online.
Furthermore, we believe leading makers –
Toshiba and Samsung – remain cautious on the
rate of capacity ramp up, balancing it against bit
gains from process migration and attempting to
avoid the debilitating overcapacity that plagued
the industry for years.
From a capex/sales perspective, rising capex is
not excessive, either in our view. We estimate
capex/sales for the global NAND industry to
approach and remain at c45-50% during 2010-11e.
This is a steep increase over the anomalous c25%
in 2009, but compares favourably compared to the
over-build situation in 2006-08, when capex/sales
varied between 58% (2008) and 82% (2007). The
sharp forecast capex rise follows two consecutive
years of severe cut backs, during which the vast
majority of less efficient 200mm fab capacity was
decommissioned.
Process migration accelerates…
Despite wafer adds, process migration, multi-level
cells and higher utilisations following migration
to immersion lithography, still drive much of the
NAND bit supply growth. We forecast NAND
supply growth of c114% y-o-y next year, though
wafer capacity is rising c20% y-o-y, as leading
vendors all migrate to 2xnm processes. Already,
3xnm has become mainstream. For Toshiba,
32nm and 24nm scale will account for c90% of its
bit capacity by end of this year. The race to
improve processes between leaders for cost and
product competitiveness is a key feature of the
current spate of bit growth.
NAND process migration – Samsung Electronics
100%
80%
60%
40%
20%
0%
2007 2008 2009 2010f 2011f 2012f
8xnm 6xnm 5xnm 4xnm 3xnm 2xnm
Source: Company, HSBC estimates
A combination of push and pull are emboldening
makers to commit capex to put as many dies on a
wafer as possible, led by node migration:
Strong demand (manufacturers’ consensus is
for c80-90% y-o-y bit growth this year); we
forecast 73% y-o-y bit growth this year.
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