As the end of the year approaches, if we were to select the buzzword of the year for the semiconductor industry, 'shortage' would undoubtedly make the list.
Since this year, component shortages and price hikes have permeated the entire electronics supply chain, with prices of key smartphone components such as MLCC, DRAM, and Chip-R remaining high. Upon closely examining this long list of shortages, we surprisingly found NOR Flash chips, which have been gradually phased out from the main businesses of Cypress and Micron. Among them, Cypress's NOR Flash is severely short in supply, with prices expected to increase by an average of 20% in the fourth quarter compared to the third quarter.
Analysis of the Reasons for the Price Increase of NOR Flash Chips
NOR Flash generally has a relatively small capacity, and years of market competition have kept its price hovering at a low level. At this time, SSD solid state drives and smartphones have ignited the NAND Flash market, and international giants that used to dominate the NOR Flash market have collectively turned to the NAND Flash market.
In February of this year, Micron Technology announced its withdrawal from the NOR Flash market and divested its NOR chip business, instead focusing on DRAM and NAND Flash. In April, Cypress announced that it would exit the mid to low capacity NOR Flash market and focus on high-capacity automotive and industrial applications. According to market data, Micron and Cypress have a NOR Flash market share of over 40%. The withdrawal of two companies has worsened the shortage of NOR Flash chips, and may face even greater shortages next year.
In fact, some people attribute the significant price increase and shortage of NOR Flash this year to the use of AMOLED panels in the iPhone X. In AMOLED panels, NOR Flash is mainly used to store optical compensation (De mura) encoding to solve display consistency issues. We know that the demonstration effect of Apple phones should never be underestimated, and domestic mobile phone manufacturers will definitely follow suit. In addition, the widespread adoption of NOR chips in the automotive and IoT industries has led to a growing shortage of NOR Flash chips like a snowball.
In the NOR Flash memory chip market, which is valued at about $3 billion globally, the withdrawal of industry giants Cypress and Micron has led to significant supply shortages. Now, companies from Taiwan and mainland China, such as Winbond, Macronix, GigaDevice, and XTX, are expanding their production capacity to meet demand. Despite this, the current shortage of NOR Flash chips is expected to continue until 2018. Once considered an overlooked 'wild lily' by international giants, NOR Flash has bid farewell to its harsh winter and is now experiencing an early spring.
Mr. Long Dongqing, CEO of XTX, expressed confidence, stating that although XTX is a young company, it has grown rapidly. The company's storage products have become popular brands among customers and have established deep cooperation with well-known domestic distributors such as Kedong Yiduan, China Electronics Port, and Beihaozhi. Additionally, XTX has built an excellent distribution network overseas. In 2017, XTX's sales reached 300 million RMB.
Over the next six months, XTX plans to launch three series of products ranging from 1Mb to 128Mb, including options for 3V, 1.8V, and wide voltage ranges from 2.5V to 3.6V. XTX will continue to increase its investment in research and development, rapidly enhancing its supply capabilities.
NOR Flash offers fast transmission speeds and stable quality, making it an essential component in multi-chip packages (MCP) integrated with DRAM for major smartphone brands. However, due to capacity limitations, NOR Flash was quickly replaced by NAND Flash in smartphones. With pressure from NAND chips, the NOR Flash market saw intense competition, leading to mergers such as Micron acquiring Numonyx, Microchip acquiring SST, and Cypress acquiring Spansion. As a result, the NOR Flash market is now dominated by a few large manufacturers.
The emergence of new markets like the Internet of Things has once again placed NOR Flash, known for its fast read speeds and stability, at the forefront. With the exit of international giants, the main players in the NOR Flash market today include Taiwanese companies like Winbond and Macronix, as well as Chinese companies such as GigaDevice and XTX.
Mr. Long Dongqing, CEO of XTX, stated that in recent years, more Chinese enterprises have emerged in the storage market. Whether it's product performance or market presence, we have strong competitiveness. XTX's SPI NOR flash memory products feature extremely low power consumption, with static current less than 1 microampere; they offer high stability, data retention up to 20 years, and support up to 100,000 write-erase cycles, suitable for industrial-grade and high-temperature environments up to 110 degrees Celsius.
Mr. Long attributes two main reasons for the outstanding product parameters: first, XTX has fully leveraged the advantage of being a latecomer, adopting the globally advanced 65-nanometer process in the Nor Flash small-capacity series, achieving optimal cost-performance, and becoming a dark horse in the NOR Flash chip market; second, the core team at XTX all come from Spansion and STM, former global leaders in embedded storage chips, with an average of over 15 years of experience in the semiconductor industry.
The company's founder and CEO, Mr. Long Dongqing, has previously worked at four globally renowned chip companies: Renesas, ST, Freescale, and Spansion. XTX aims directly for the second position among domestic embedded storage chip design companies.
Witsview estimates that this year, AMOLED panels will account for nearly 30% of the smartphone market share, with Apple's iPhone series alone requiring 75 million units, and NOR Flash supply shortages are expected to continue. According to predictions, by 2025, the number of connected devices worldwide will reach 75 billion, with the Internet of Things (IoT) being the field where NOR Flash is most widely used.
As IoT application scenarios become clearer, market demand for NOR Flash is further defined, while the two leading American companies Cypress and Micron have already exited the NOR Flash chip market, leaving a significant gap. Currently, Winbond and Huaxing in Taiwan are the primary suppliers of NOR Flash chips, with existing capacity reaching its limit and the product supply-demand imbalance still unresolved.
Fortunately, companies like XTX have already made early preparations, working together with customers to seize the new growth opportunities in the NOR Flash market!
