1. Energy storage industry cycle
The semiconductor industry includes integrated circuits, optoelectronic devices and sensors and other sub-industries, in which integrated circuits can be subdivided into memory and analog circuits according to their functions. In 2021, the global semiconductor industry will reach 555.9 billion dollars, up 26% year over year.
Among them, the memory segment accounted for 28%, and the market size increased by 31% year on year, making it the largest sub-industry in the semiconductor market. A memory chip is one of the semiconductor core components, which can be divided into different types according to their properties.
Depending on whether the data can continue to be stored in the device, the memory chip can be divided into two types: vulnerable power loss and non-vulnerable power loss. The volatile memory chip mainly includes static random access memory (SRAM) and dynamic random access memory (DRAM). Non-volatile memory mainly includes programmable read only memory (PROM), flash memory (Flash) and erasable programmable read only registers (EPROM and EEPROM).
Memory chips, as a semiconductor industry vane, present a strong periodicity. Industrial prosperity is greatly affected by the relationship between supply and demand, and when prosperity is high. The top 10 energy storage battery cell companies expand production capacity to increase revenue, easily leading to oversupply. When the boom drops, it will shrink production capacity, cut prices to clear inventory, and ultimately lead to a short supply in the market.
In addition, the storage market has long-term growth potential. With the rapid development of artificial intelligence, the Internet of Things, cloud computing, and other industries, the long-term market size of the entire storage industry continues to rise.
2. Demand drives market growth
At present, the downstream market of the storage industry is smart phones, servers, PCs, and other smart mobile devices. Demand for energy storage on mobile devices continues to be weak, and a small rebound is expected in the second half of the year. From 2019 to 2022, global smartphone shipments have not fluctuated much.
China's smartphone shipments have continued to decline since 2016, with a sharp rebound in 2021. Due to adverse factors such as cycle extension, China's mobile energy storage market will continue to shrink in 2022. Global and Chinese portable energy storage shipments are expected to rebound in 2023. The growing average capacity of mobile phones is boosting the demand for storage.
As differences between old and new smartphones have narrowed in recent years, consumers have seen longer replacement cycles and higher demand for high-capacity models. Based on the battery requirements of mobile phone products, product performance and storage capacity are continuously improved. At present, lifepo4 battery is widely used on the market.
Lithium ion batteries have the advantages of light weight, strong plasticity, and high cycle times. Short-term server demand is under pressure, and shipments are expected to pick up in the second half of the year. Major cloud service buyers, Google and Meta, both saw slower revenue growth. The server market underwent a round of inventory adjustments.
However, due to the overall positive growth outlook for AI and cloud computing, the flash memory market is expected to see server shipments of 13.3 million units in 2022, up 3% in 2022, and recover to 5% growth in 2023.
● Automotive electronics
Electric and intelligent vehicles are expected to increase demand for on-board storage China's new energy vehicle shipments continue to grow. Rising demand for new generation systems and more advanced driver assistance systems will drive strong growth in the automotive storage market in 2023.
Specifically, the demand for automotive storage, such as on-board smart chips, is growing. Demand for cameras, lidar, thermal imaging, and other sensors will also increase to meet the need for data collection, exchange, and real-time information sharing, driving the growth of the vehicle storage market.
3. Energy storage companies to accelerate the supply
Major storage plants are cutting capital expenditures, and memory chip supply and demand relationships are expected to improve As downstream demand continues to be low, major memory chip companies are reducing capital expenditures and capacity utilization.
In the future, with major storage companies actively de-stocking inventory and reducing production, the supply-demand relationship is expected to continue to improve. Samsung's storage division generated 12.14 trillion won, down 38% year-on-year and 20% from the previous quarter.
Operating profit fell 97%. Inventories are near all-time highs and are expected to decline gradually. Inventory pressure at large storage plants is generally high; average inventory turnover days are 235 days, and inventory write-down is 153 days. Inventory turnover days are expected to peak this quarter. Inventories are expected to decline gradually thereafter.
4. Situation of price change
The price end of the memory chip price decline is expected to converge, and the improvement of supply and demand relations will accelerate the price inflection point. At present, the market is still in a weak consumer demand situation, and inventory pressure on memory companies continues.
As many companies have begun to actively reduce production, the battery price declines are expected to converge. Market demand for energy storage is still shrinking in the home energy storage field. Influenced by various uncertain factors such as market demand and inflation, the first half of 2023 is forecast, and prices are likely to continue to fall.
In summary, on the demand side, demand for memory chips remains at a low level, while on the supply side, the supply-demand relationship is expected to continue to improve with the initiative of major companies to destock and reduce production. Based on the current supply-demand relationship, we believe that industry prosperity is at its lowest point in the region, and demand is expected to bottom out and recover.