IC Insights: ‘Memory Chips Will Grow at Annual Rate of 5% Only on Average by 2022’

With optimism and pessimism about the memory market mixed, some experts predicted that the memory semiconductor market will grow about five percent only by 2022. If the prediction turns out to be correct, it will deal a big blow not only to semiconductor-heavy Samsung Electronics but to the Korean economy which heavily hinges on semiconductor manufacturers such as Samsung Electronics and SK Hynix.

According to the semiconductor industry on January 14, market researcher IC Insights predicted that memory semiconductors would grow 5.2% a year on average between 2017 and 2022 through 2018 McClean Report.

IC Insights said that the growth of the memory market last year which surged 58 percent, was rather strange and the growth would return to a more "normal" growth phase by 2022. In particular, "The average selling prices (ASP) of NAND flashes and DRAMs which has risen sharply is normalizing thanks to the expansion of NAND flash and DRAM production capacity and a balance is being struck between supply and demand for solid state drives (SSDs) and memory semiconductors for virtual reality and augmented reality, graphics and artificial intelligence,” IC Insights said.

This pessimism is based on supply and demand. This is because although the fourth industrial revolution is fueling demand for memory chips so companies’ expansion of production facilities is on a sharp rise. Actually it is said that the Tsinghua Uni Group, Fujian Jinhua Integrated Circuit (JHICC), Hebei Changshan and other Chinese companies will start production of NAND flashes and DRAMs in the second half of this year.

However, there is an opposing argument that those who the memory market will slow down in a short period of time are underestimating the fourth industrial revolution.

Market researcher IHS Markit forecast that the world DRAM market would reach US$84.4 billion this year, up 16.9% from 2017. The NAND flash market is projected to climb 10 percent year on year to US$59.2 billion. Although the growth is lower than last year's, it is much higher than the growth that IC expected.

Memory market optimists believe that technologies underlying the fourth industrial revolution such as AI, big data, and the internet of things (IoT) require memory semiconductors. "The expansion of data-based computing will trigger a supply shortage in the NAND sector in the second half of this year," Citi Global Market Securities recently said in a report.

"Few analysts predicted the huge memory boom,” said an industry watcher. “The memory market will be not as good as last year. But I don’t think that the memory market will become slack soon.”