[News] Latest Updates on HBM from the Leading Three Global Memory Manufacturers

Amid the AI trend, the significance of high-value-added DRAM represented by HBM continues to grow.

HBM (High Bandwidth Memory) is a type of graphics DDR memory that boasts advantages such as high bandwidth, high capacity, low latency, and low power consumption compared to traditional DRAM chips. It accelerates AI data processing speed and is particularly suitable for high-performance computing scenarios like ChatGPT, making it highly valued by memory giants in recent years.

Memory is also representing one of Korea’s pillar industries, and to seize the AI opportunity and drive the development of the memory industry, Korea has recently designated HBM as a national strategic technology.

The country will provide tax incentives to companies like Samsung Electronics. Small and medium-sized enterprises in Korea can enjoy up to a 40% to 50% reduction, while large enterprises like Samsung Electronics can benefit from a reduction of up to 30% to 40%.

Overview of HBM Development Progress Among Top Manufacturers

The HBM market is currently dominated by three major storage giants: Samsung, SK Hynix, and Micron. Since the introduction of the first silicon interposer HBM product in 2014, HBM technology has smoothly transitioned from HBM, HBM2, and HBM2E to HBM3 and HBM3e through iterative innovation.

According to research by TrendForce, the mainstream HBM in the market in 2023 is HBM2e. This includes specifications used in NVIDIA A100/A800, AMD MI200, and most CSPs’ self-developed acceleration chips. To meet the evolving demands of AI accelerator chips, various manufacturers are planning to launch new products like HBM3e in 2024, expecting HBM3 and HBM3e to become the market norm.

The progress of HBM3e, as outlined in the timeline below, shows that Micron provided its 8hi (24GB) samples to NVIDIA by the end of July, SK hynix in mid-August, and Samsung in early October.

As for the higher-spec HBM4, TrendForce expects its potential launch in 2026. With the push for higher computational performance, HBM4 is set to expand from the current 12-layer (12hi) to 16-layer (16hi) stacks, spurring demand for new hybrid bonding techniques. HBM4 12hi products are set for a 2026 launch, with 16hi models following in 2027.

Meeting Demand, Manufacturers Actively Expand HBM Production

As companies like NVIDIA and AMD continue to introduce high-performance GPU products, the three major manufacturers are actively planning the mass production of HBM with corresponding specifications.

Previously, media reports highlighted Samsung’s efforts to expand HBM production capacity by acquiring certain buildings and equipment within the Samsung Display’s Cheonan facility.

Samsung plans to establish a new packaging line at the Cheonan plant dedicated to large-scale HBM production. The company has already invested KRW 10.5 trillion in the acquisition of the mentioned assets and equipment, with an additional investment of KRW 700 billion to KRW 1 trillion.

Micron Technology’s Taichung Fab 4 in Taiwan was officially inaugurated in early November 2023. Micron stated that Taichung Fab 4 would integrate advanced probing and packaging testing functions to mass-produce HBM3e and other products, thereby meeting the increasing demand for various applications such as artificial intelligence, data centers, edge computing, and the cloud. The company plans to start shipping HBM3e in early 2024.

In its latest financial report, SK Hynix stated that in the DRAM sector in 2023, its main products DDR5 DRAM and HBM3 experienced revenue growth of over fourfold and fivefold, respectively, compared to the previous year.

At the same time, in response to the growing demand for high-performance DRAM, SK Hynix will smoothly carry out the mass production of HBM3e for AI applications and the research and development of HBM4.

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(Photo credit: SK Hynix)


[News] Strong Performance in HBM Ends SK Hynix’s Four Consecutive Quarters of Losses

South Korean memory giant SK Hynix has released its financial results for the fourth quarter of 2023 and the full year 2023, ending on December 31, 2023. In the fourth quarter, the revenue reached KRW 11.306 trillion, operating profit amounted to KRW 346 billion, and net loss was KRW 1.38 trillion. The operating profit margin for Q4 2023 was 3%, with a net profit margin of negative 12%.

Source: SK Hynix

SK Hynix noted that, with the rebound in the memory market, the operating profit for the fourth quarter of 2023 reached KRW 346 billion, successfully marking a turnaround from losses. This signifies that SK Hynix, in just one year, has managed to break free from the continuous operating losses experienced since the fourth quarter of 2022.

SK Hynix emphasizes that the overall memory market conditions improved in the last quarter of 2023 with demand for AI server and mobile applications increasing and average selling price (ASP) rising. 

Simultaneously, the effective implementation of a profit-oriented business plan by SK Hynix has enabled the company to achieve the goal of turning losses into profits within just one year.

Source: SK Hynix

Furthermore, SK Hynix has reduced the cumulative scale of operating losses that persisted until Q3 2023. In total, the consolidated revenue for 2023 reached KRW 32.766 trillion, with an operating loss of KRW 7.73 trillion and a net loss of KRW 9.138 trillion. Overall, the operating loss rate for 2023 is 24%, and the net loss rate is 27%.

SK Hynix also notes that in the DRAM sector for 2023, the company actively addressed customer demands. The revenue for the company’s flagship products, DDR5 and HBM3, increased by more than four and five times, respectively, compared to 2022.

Additionally, considering the relatively slow recovery in the NAND Flash memory market, the business plan primarily focuses on investment and cost efficiency.

In response to the growing trend in demand for high-performance DRAM, SK Hynix will smoothly proceed with the mass production of HBM3e memory for AI and the development of HBM4.

TrendForce’s earlier research into the HBM market indicates that NVIDIA plans to diversify its HBM suppliers for more robust and efficient supply chain management. The progress of HBM3e, as outlined in the timeline below, shows that SK Hynix provided its 8hi (24GB) samples to NVIDIA  in mid-August.

Simultaneously, the company aims to supply high-performance and high-capacity products like DDR5 and LPDDR5T to the server and mobile markets.

Moreover, to address the continued growth in demand for AI servers and the widespread adoption of edge AI computing applications, SK Hynix will exert efforts in the development of high-capacity server module MCR DIMM and mobile module LPCAMM2 to respond to the ever-increasing demand for AI servers and on-device AI adoption.

For NAND, the company aims to continue to improve profitability and stabilize the business by expanding sales of premium products such as eSSD, expected to improve profitability and strengthen internal management.

Lastly, SK Hynix emphasizes its commitment to maintaining and enhancing profitability and efficiency by continuing to expand the production of high-value-added products in 2024, similar to its strategy in 2023. The company will focus on minimizing capital expenditures while prioritizing stable business operations. 

“We achieved a remarkable turnaround, marking the first operating profit in the fourth quarter following a protracted downturn, thanks to our technological leadership in the AI memory space,” said Kim Woohyun, Vice President and Chief Financial Officer (CFO) at SK Hynix.

Kim further stated, “We are now ready to grow into a total AI memory provider by leading changes and presenting customized solutions as we enter an era for a new leap forward.”

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(Photo credit: SK Hynix)

Please note that this article cites information from SK Hynix


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

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

[News] Increasing HBM Capacity to Sustain Market Share, SK Hynix Rumored to Upgrade Wuxi Plant

In response to the recovery in the memory market and the increasing demand for High Bandwidth Memory (HBM) driven by AI chips, South Korean memory giant SK Hynix is reportedly planning to upgrade part of its DRAM production equipment at its Wuxi plant to the fourth-generation of 10-nanometer process this year.

According to a report by Seoul Economic Daily, the Wuxi plant is a core production base for SK Hynix, contributing approximately 40% of its total DRAM production. Currently, the Wuxi facility is producing second and third-generation DRAM, which falls under the category of older products in the late 10-nanometer class.

As the semiconductor market enters a recovery phase, the expansion of SK Hynix’s high-performance chip capacity has become urgent. To maintain its market share in the High Bandwidth Memory (HBM) market, SK Hynix needs advanced products such as the fourth-generation of 10-nanometer DRAM or higher versions.

According to a previous TrendForce press release, in terms of competitive positioning, SK Hynix’s HBM3 products are leading other manufacturers and serve as the primary supplier for NVIDIA Server GPUs. Samsung, on the other hand, focuses on meeting orders from other cloud service providers.

SK hynix’s fifth-generation HBM (HBM3E), which began mass production in the first half of this year, has a maximum capacity of 36GB (288Gb) in its next-stage product. It achieves this through stacking 12 chips of 24Gb DRAM. In 2022, SK hynix first adopted the fourth-generation DRAM process to realize 24Gb DRAM. HBM3E requires the use of the fourth generation or higher versions of the DRAM manufacturing process to meet customer demands.

SK Hynix, in response to increasing HBM3E orders from key customers like NVIDIA, must find ways to convert the Wuxi DRAM process in addition to utilizing the capacity of its Icheon headquarters factory.

SK Hynix has been using Extreme Ultraviolet (EUV) lithography since the production of the fourth-generation of 10-nanometer DRAM. However, due to the inability to introduce EUV exposure equipment to Wuxi, the production of this DRAM becomes challenging. Notably, constrained by U.S. restrictions on the export of EUV exposure eqipment to China, transitioning the Wuxi plant to the fourth-generation of 10-nanometer DRAM and beyond will pose a significant challenge.

The report indicates that SK Hynix plans to complete part of the fourth-generation DRAM process on the Wuxi production line, then transport the chips to the Icheon plant for EUV application, and finally return them to Wuxi to complete the entire process. SK Hynix has experience with a similar approach during the Wuxi plant fire in 2013, overcoming disruptions in DRAM production.

Regarding the rumors about the Wuxi plant upgrade, SK Hynix stated that it cannot confirm the specific operational plans for the factory.

(Image: SK Hynix)

Please note that this article cites information from Seoul Economic Daily

[News] Memory Giants Plan DDR5, HBM Expansion; No Immediate Impact on Taiwanese DDR4 Pricing

The recovery of the memory industry is evident, with Taiwanese companies such as Macronix, Nanya Technology, and Transcend all showing month-on-month revenue growth in December last year. Additionally, contract prices for DRAM and NAND Flash are expected to continue rising in the first quarter of 2024. However, the global second-largest memory manufacturer, SK Hynix, plans a expansion, introducing a variable element to the memory market.

According to a report by the Commercial Times, SK Hynix disclosed that it might reduce the scale of DRAM production cuts in the first quarter, while adjustments to the NAND Flash production strategy may occur in the second or third quarter, depending on the situation.

In response to major memory manufacturers’ expansion plans, Taiwanese memory firms believe that Hynix’s expansion should focus primarily on DDR5 and HBM (High-Bandwidth Memory) products. Nevertheless, Taiwan currently specializes in DDR4 products, and it is not expected to impact product pricing.

According to a press release from TrendForce published this week, the DRAM contract prices are estimated to increase by approximately 13–18% in 1Q24 with mobile DRAM leading the surge. It appears that due to the unclear demand outlook for the entire year of 2024, manufacturers believe that sustained production cuts are necessary to maintain the supply-demand balance in the memory industry.

For consumer DRAM, manufacturers are aggressively raising contract prices, which has prompted buyers to stockpile early. This has greatly improved purchasing momentum. However, the first quarter coincides with the industry’s off-season, and end sales are expected to be weak and lead to increased inventory levels due to buyers’ early stocking strategies.

Manufacturers generally believe that in 2024—with the expanding penetration of HBM and DDR5 each quarter—low-margin DDR4 capacity will be crowded out, thereby leading to shortages. As such, DDR4 contract prices are expected to outpace DDR3 in the first quarter by 10–15%. DDR3 continues to be supplied by Taiwanese manufacturers, and with generally high inventory levels, its contract price increase is estimated at 8–13% for 1Q24.

(Image: SK Hynix)

Please note that this article cites information from Commercial Times

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