[News] SK hynix’s Expansion Plans Raise Concerns in Taiwan’s DRAM Market

2024-01-17 Semiconductors editor

SK hynix, the South Korean memory giant, has revealed plans to consider increasing production of specific DRAM in the first quarter due to improved market conditions. Concerns arise in the market regarding the potential resurgence of capacity utilization, challenging the consensus among memory manufacturers to reduce production for price enhancement, possibly hindering the upward trajectory of DRAM in the future.

According to a report by the Commercial Times, industry experts believe that major memory manufacturers, including Samsung, SK hynix, and Micron, are upgrading their production capacities to 1-alpha/beta advanced processes to meet the demand for more profitable DDR5 and High Bandwidth Memory (HBM). The outlook for niche DRAM product in the future is expected to remain positive.

SK Hynix CEO Kwak Noh-jung previously stated at the 2024 CES in Las Vegas that the company is considering increasing production of specific DRAM in the first quarter due to improved market conditions. Kwak mentioned that while the worst conditions for NAND Flash should be over, the industry’s recovery is slower. Therefore, any decision to increase production would likely be considered after the mid-year point.

Following this announcement, some industry insiders expressed concerns about the potential increase in memory manufacturers’ DRAM capacity utilization, which could negatively impact the future pricing trend of DRAM.

However, according to the Commercial Times, quoting a key figure in the Taiwanese memory industry revealed that SK Hynix’s planned increase in production primarily focuses on HBM for AI applications, with a slight increase in DDR5, while the production of DDR4 will continue to decrease.

As the three major manufacturers focus on 1-alpha/beta processes, increasing the supply of DDR5 and HBM, the pricing of niche-type DRAM is expected to gradually improve amid capacity constraints. Therefore, the perceived impact of SK Hynix’s increased production of specialized DRAM on the overall future DRAM pricing is not anticipated to be negative.

TrendForce points out that, considering the need for more advanced equipment to produce increased quantities of HBM and DDR5, the production capacity for DDR3 and DDR4 in the first quarter of 2024 is expected to decrease compared to the previous year.

However, due to market considerations and the ongoing shift towards DDR5 for high-end products, the demand for DDR3 and DDR4 is expected to slow down. This distribution of production capacity aligns with market trends and developments.

Tracking back the memory prices, from the fourth quarter of 2022 to the third quarter of 2023, the memory market experienced a downturn, prompting Samsung, SK Hynix, and Micron to collectively reduce production. By the fourth quarter of 2023, DRAM and NAND flash memory prices finally began to rebound, continuing into the first quarter of 2024, with the momentum of price increases continuing to be closely monitored by the market.

(Image: SK hynix)

Please note that this article cites information from Commercial Times