Global memory semiconductor companies are expected to significantly expand their DRAM production capacity this year, entering into a competitive race for dominance in the DRAM market. In particular, Samsung Electronics, SK Hynix, and China's Changxin Memory Technologies (CXMT) are reported to increase their DRAM wafer input significantly compared to last year. As a result, the general DRAM market is likely to experience a decline in prices due to oversupply, while high-bandwidth memory (HBM), which is relatively more profitable, is expected to account for a larger share of operating profit.
According to an analysis of DRAM production capacity forecasts for this year obtained by CHOSUNBIZ from market research firm Omdia, Samsung Electronics plans to have a DRAM wafer input of about 7.89 million units this year. This represents a 6% increase from last year (7.44 million units). Given the plan to increase production capacity at the Pyeongtaek campus by up to 25%, it is observed that Samsung aims to expand its market share in cutting-edge processes.
In response, SK Hynix is also set to aggressively expand its DRAM wafer input by 15% this year compared to last year. It is expected that the utilization rate of its Wuxi factory in China will be maximized, and the facilities at Icheon M14 and M16 will be operated to their fullest, achieving an annual wafer input of about 5.92 million units. This will be the highest level in SK Hynix's history. Meanwhile, Micron Technology, based in the U.S., is also expected to slightly increase its DRAM wafer input to around 3.6 million units this year.
The offensive from CXMT, which began to threaten the position of the three major DRAM players since last year, is expected to become significant this year. Omdia forecasts that CXMT's DRAM wafer production this year will reach 2.37 million units, indicating a 54% increase compared to last year. This is more than double the level compared to 2023. It is rare to find cases in the memory semiconductor industry where production capacity has increased more than twice in two years.
An industry official noted, "If CXMT focused mainly on producing the outdated DRAM DDR4 last year, this year, it will expand the mass production of DDR5, which will have an even greater negative impact on Samsung Electronics and SK Hynix." Previously, Choi Jeong-dong, a researcher at the Research Institute TechInsights, explained in a written interview with CHOSUNBIZ that "CXMT has been increasing its wafer production in recent years, particularly focusing on improving production yield," adding that "last year, it appears that there was a significant improvement in yield."
The production expansion of Samsung Electronics, SK Hynix, and Micron, which dominate more than 90% of the global DRAM market, along with the entry of CXMT, is expected to continue the declining trend in DRAM prices that persisted throughout last year into this year. According to market research firm TrendForce, the average selling price (ASP) of DRAM is expected to drop by 8% to 13% in the first quarter alone. Song Myeong-seob, a researcher at IM Securities, stated, "Over the past 20 years, the duration of semiconductor cycles has been 1.5 to 2 years," and added that "the decline in (general memory) semiconductor prices is likely to continue until the end of this year."
As a result, it has become important for Samsung Electronics and SK Hynix to expand profitability through securing competitiveness in high-bandwidth memory (HBM). The more DRAM that is invested in HBM relative to overall DRAM production, the higher the profit margin can be achieved. SK Hynix is currently maintaining its technological lead not only in HBM 8-layer supplied to NVIDIA but also in the 12-layer market, leading to favorable forecasts.
The critical factor for Samsung Electronics' performance going forward is whether it can become a primary supplier in the HBM supply chain for companies like NVIDIA and AMD. Unlike the past where they were overwhelmingly defeated by SK Hynix in HBM3E (5th generation HBM), it is known that significant progress has been made in developing HBM4 (6th generation HBM) recently. Whether deliveries to major clients such as NVIDIA and Broadcom will take place in the second half of this year is expected to be a crucial turning point for Samsung Electronics' performance.
The emergence of Broadcom as a significant player following NVIDIA, the world's largest HBM customer, is also an important variable. TrendForce predicts that overall HBM consumption will rise significantly, surpassing an annual growth rate of 200%, and that HBM consumption will more than double next year. To reduce dependence on NVIDIA, major tech companies like Google and Meta have begun developing their own artificial intelligence (AI) accelerators and are outsourcing designs to Broadcom, leading to a high demand for high-performance HBM associated with AI accelerators. Lee Seung-hoon, an analyst at IBK Investment & Securities, projected, "2025 will be the time when the AI semiconductor industry grows substantially in the global market, resulting in an overflow of HBM demand."