20160617-三星证券-3D_NAND_at_onset_of_expansion_phase_68页_1mb

Sector Update Summary

Core Content

This report provides an analysis of the semiconductor investment cycle, focusing on 3D NAND and OLED technologies, and evaluates the potential for growth in the equipment and materials supply chains. It outlines investment strategies, market forecasts, and key risks for investors in the sector.

Main Points

• 3D NAND Expansion: The 3D NAND industry is entering an expansion phase, with expected global capacity increases of 513,000 sheets/month by 2018, surpassing current consensus expectations. This will require a minimum investment of USD38 billion.
• SSD Demand Growth: As SSD prices fall, consumers are likely to increase storage capacity rather than reduce costs. SSD usage is expected to be 4.1x higher in 2018 than in 2015.
• NF3 Supply Tightening: NF3 supplies are expected to tighten in 2018, with a 2,500-tonne capacity increase needed in 2017. SK Materials and Hyosung are likely to contribute 1,000 and 1,250 tonnes respectively.
• Investment Strategy: The report recommends accumulating shares in 3D NAND equipment and materials makers. Equipment makers like Wonik IPS, TES, and Eugene Technology are expected to rally first, followed by materials firms.
• Market Performance: Semiconductor equipment stocks have seen significant rallies, but investors may be cautious due to overperformance. The report suggests that the market may be overbought, and caution is advised.

Key Information

3D NAND Industry Outlook

• Capacity Expansion: Expected to reach 513,000 sheets/month by 2018, exceeding IHS forecasts of 398,000.
• Cost Improvements: SEC can now manufacture 48-layer 3D NAND at lower costs than planar NAND, improving margins.
• Facility Constraints: SEC’s Xian factory is at full capacity, necessitating new facilities such as Pyeongtaek for expansion.
• Investment Impacts: The expansion is expected to boost equipment demand, with a potential investment scale exceeding previous expectations.

Semiconductor Materials Outlook

• NF3 Demand: NAND capacity expansion will increase NF3 demand, with SK Materials being a top beneficiary.
• Market Cap Trends: SK Materials is seen as a top pick due to its diversified portfolio and exposure to both NAND and OLED markets.
• Hansol Chemical: Reiterated at BUY with a revised target price of KRW100,000. Operating profit forecast for 2017 is raised by 9% due to strong sales growth in high-profit semiconductor-use peroxide.

Investment Recommendations

• Equipment Makers: Wonik IPS is the top pick with a target price of KRW31,000. TES and Eugene Technology are also expected to benefit.
• Materials Makers: SK Materials is the top pick with a target price of KRW150,000. Hansol Chemical, Soulbrain, and Wonik Materials are also likely to benefit.

Market Dynamics

• Investor Sentiment: Equipment shares have rallied, but the market is overbought. Materials firms are expected to follow suit as demand from NAND and OLED increases.
• Risk Factors: Potential cuts to PC and smartphone shipment forecasts, and conservative capex plans from NAND makers could affect the sector.

Charts and Tables

• Chart 1: Share-price cycle based on tech migration.
• Chart 2: Equipment market sales forecast revisions.
• Chart 3: Capex and forecasts for DRAM vs NAND.
• Chart 4: NAND operating margin for SEC vs Toshiba.
• Chart 5: 2015 NAND consumption by application.
• Chart 6: SEC's capacity expansion strategy.
• Chart 7: SSD structure.
• Chart 8: HDD structure.
• Chart 9: HDD vs SSD sales volume.
• Chart 10: Storage ASP trends.

Key Companies

Summary

The report highlights the shift in the semiconductor industry towards 3D NAND and OLED, driven by increasing demand for faster and more efficient storage solutions. It forecasts significant capacity expansions and investment in these areas, which are expected to benefit both equipment and materials firms. SK Materials and Wonik IPS are highlighted as top picks due to their exposure to NAND and OLED growth. The report also notes that while equipment shares have rallied, the market is overbought, and materials firms are likely to follow. Risks include potential demand cuts and conservative capex plans from NAND makers. Overall, the investment cycle is moving from demand recovery to investment expansion, with the potential for share-price rallies in the coming years.