Thanks for the Memory

We were flat out this week as we were finalising our market data for Q3 at the same time as we created this week’s issues, so there has been little time to sit back and reflect. However, a theme seemed to emerge from the news and that is the big changes that are going on in the world of semiconductors.

Intel is particularly interesting as it has lost its top spot in the global semiconductor market to Samsung. Samsung has ridden the wave of growth and strong pricing of memory, both DRAM and NAND flash memory to take top spot. Intel doesn’t depend so much on memory, so has more stable revenues.

Toshiba also has a strong share of the flash market, which is an important factor in the attractiveness of the business that the consortium led by Bain and including Apple, Dell, Hynix and Hoya, wants to buy. The market for flash has been growing for a long time and, increasingly, flash is taking over from hard disks.

I got to thinking about my own use of flash instead of HDDs. I started using SSDs to replace HDDs several years ago – it is often a great way to refresh an older PC and speed it up for little cost. SSD, though, tends to be expensive, so I tended to buy smaller SSDs, then upgrade the capacity later as costs came down. However, my latest PC has a 1TB SSD (I bought it at the end of last year). In the past, I was always filling up local storage, but this time it looks as though the 1TB will last for the life of the PC – there is still plenty of space and I haven’t tried clearing space from software downloads etc. It seems that the amount of storage that I need on my PC may have reached a limit as so much more is now done with streaming and cloud storage rather than needing local storage.

On the other hand, I find the opposite problems with my smartphone and tablet. I rarely buy the largest storage version of a mobile product as the premium for the extra storage always seems too much. The iPhone X with 256GB costs £150 ($198) more than the 64GB version. That’s three times the cost of buying the same amount of memory (192GB) as a USB key and that seems like what my US friends called “gouging” to me, wearing my ‘consumer’ hat.

My tablet is around three years old now, I think, and is always full. My smartphone has 32GB that seemed a lot when I got it, but is always full. That could be because I have too much music on it. I should clear some, especially as I don’t listen to it that often. Anyway, it seems to me that there is still plenty of room to expand the amount of memory on smartphones and tablets, but maybe we’ve got to a temporary stalling in the amount needed for PCs?

On the other hand, experience has shown that, over the years, whatever we have today is never enough tomorrow, so I’m not quite ready to forecast that demand for flash won’t continue to expand.

Samsung is committed to huge investments. IC Insights has shown this chart of Samsung’s investments in semiconductors and believes that Samsung will represent 33% of the $26.2 billion in total semiconductor industry capital spending for Q4 this year. Samsung is investing $14 billion this year in flash, $7 billion in DRAM and $5 billion in other semiconductors. It seems that Samsung wants to frighten off possible new competition from China.