On May 17th, Toshiba issued a statement saying that its sale of its Toshiba Semiconductor (TMC) transaction has obtained all the necessary anti-monopoly review approval. Bain Capital, the leader of the acquisition consortium, also announced on the same day that it has Written approval from the Chinese anti-monopoly regulator to this acquisition. Toshiba expects the deal to be completed by June 1st.
The role played by Korean chip giant SK Hynix in the TMC sales transaction has been one of the controversial focuses of the transaction. Considering that both Toshiba and SK Hynix have a higher share in the NAND market, the two manufacturers It is worth noting what kind of impact the link will have.
In addition, the completion of the acquisition coincides with the industry's concerns about the decline in NAND prices, whether the flash memory market will usher in a 'price collapse' or even 'price war' drama is also worthy of attention.
Will the NAND market show a concentrated trend?
On September 28, 2017, Toshiba issued an announcement announcing an agreement with KKPangea (a special acquisition company set up by Bain's acquisition consortium for this acquisition) to be worth 2 trillion yen (about US$18 billion) Selling its semiconductor business to the latter. Apart from Apple, Dell, Seagate, Kingston and other companies, Korean chip maker SK Hynix is among the consortium members.
Coughlin Associates Chairman, Tom Coughlin, Digital Storage Industry Analyst, wrote that as the Western Digital and Toshiba’s differences have been resolved earlier, the completion of the TMC sale will enable the two companies to jointly become the world’s second largest flash memory production plant. Status: Western Digital is likely to have a stable fab partnership. Systems and equipment manufacturers such as Apple, Dell, Kingston, and Seagate will also be directly connected to flash chip supply channels, while SK Hynix will be able to obtain Toshiba flash memory technology.
Gu Wenjun, chief analyst of the core research research, pointed out to 21st Century Business Herald reporter that since Toshiba’s acquisition consortium includes SK hynix, a leader in the storage industry, the acquisition may cause further concentration of the memory market and The market has a greater impact.
Previously, the media also reported that the role played by SK Hynix, one of the participants in the Bain Consortium, in this transaction was the main reason why Chinese Ministry of Commerce anti-monopoly officials had doubts about the transaction. DRAMeXchange In the fourth quarter of 2017, Samsung ranked first in the NAND flash memory market with a 38% share, Toshiba followed with a 17.1% share, and SK hynix ranked fifth with 11.1% share. .
Due to the long-term results of SK hynix's investment in this acquisition, Samsung Securities maintained a 'buy' rating on SK Hynix in its May 21 update, and set a target price of 100,000 won (approximately ($92.32). On the same day, SK hynix shares rose 1.37 percent to close at 89,100 won (approximately US$82.25).
Hwang Min-seong, an analyst at Samsung Securities, said that Toshiba is Samsung’s only competitor in terms of related technologies. With Toshiba’s restructuring after the sale, the industry will face many strategic adjustments. Hwang further explained that After the TMC conducts the IPO, SK Hynix will hold a 15% stake in TMC after converting the convertible bonds held by it.
However, Coughlin believes that the completion of the TMC sale does not mean that the flash chip market is concentrated. On the contrary, the market will have more players. 'With the maturity of commodities such as flash memory, compared with the usual industrial integration, this is An interesting reversal. 'He wrote, 'This expansion in the number of players is driven by the rise of several Chinese flash memory manufacturers. Obviously, the flash memory industry has not yet completed its integration.'
In the short term, the completion of the TMC sale will not cause any significant impact on its own business. According to Wang Yanhui, secretary general of the China Semiconductor Investment Union, due to the fact that most memory chip manufacturers are currently in the midst of expanding plant production, the sale has finally come to an end. State is a good thing for it.
DRAMeXchange also believes that after the completion of the transaction, the investment plans of Toshiba’s follow-up Fab 6 and Fab 7 will be able to proceed smoothly as expected, and sufficient capital investment will enable Toshiba’s flash memory sector to concentrate more on the research and development of new technologies. Western Digital maintains a good relationship of cooperation and continues to compete with Samsung in the NAND flash memory market.
Flash memory prices fall
A record in the semiconductor industry in 2017 was that Samsung completed the transition to Intel, which has given way to the world’s largest semiconductor manufacturer for 25 years in a row. According to Gartner, a market research organization, Samsung’s revenue is US$59.875 billion. Revenue and 14.2% of the market share ranked first, its revenue growth rate reached 49.3%, while rival Intel was only 8.6%.
However, Samsung's strength is mainly due to the surge in the price of memory chips in the past two years. Other semiconductor manufacturers based on storage business also benefited from this wave of price increase. SK Hynix, Micron, Toshiba, Western Digital in 2017 Annual revenues were 79.6%, 71.1%, 25.1% and 119.6%, respectively, which were far higher than the 21.6% increase in the semiconductor market as a whole.
Gu Wenjun pointed out that the price increase caused by memory shortages in the past two years has caused many manufacturers to actively expand their production to increase supply. From the perspective of demand, the current memory chip industry lacks new applications for killer applications, especially NAND memory. The decline in flash memory prices is a trend.
Coughlin also believes that as 3D flash memory will gradually become the mainstream of the market, new production lines in Asia, including China, will be put into operation. The price of flash memory chips is expected to end 2016, 2017, which will usher in a decline this year. Samsung Electronics also pointed out in its second-quarter outlook released in April that NAND flash pricing may show weakness in the second quarter.
According to data from the state-level consultancy, the demand for global NAND flash memory was higher than output in the first quarter to fourth quarter of 2017, but the market has entered an oversupply situation in the first quarter of 2018. Its April update report also shows that despite the demand for NAND flash memory, Growth, but the oversupply situation still exists, which will lead to a further decline in product pricing in the second quarter of 2018.
Recent analysis pointed out that major NAND flash suppliers have been in the pain of upgrading from 2D flash memory to 3D flash memory in the past two years. With the completion of technology transfer, all large-scale 3D flash memories have been successfully produced. In addition to the decrease in the quotation, the market may also usher in a "chaotic war" in the next few years, until the formation of a small number of players like the DRAM market situation.
However, Wang Yanhui has doubts about whether NAND flash will lower its price in the near future. He pointed out that although the price of flash memory has indeed 'increased too much' in the past year, the price fluctuations in the storage market due to changes in production capacity and demand have been in a cyclical state. It is difficult to determine when the next price drop will begin.
In addition, NAND flash memory is mainly used in storage systems. The current major demand in this market comes from mobile phones and cloud storage. 'The mobile phone and cloud storage space are expanding, and the market structure is changing every year. The future trend is still difficult to judge. He told the 21st Century Business Herald reporter.