Samsung Electronics and SK hynix are employing diverging strategies regarding the sixth-generation (1c, 11–12 nm) DRAM business, which has emerged as a battleground for next-generation memory semiconductor dominance. To recover from its poor performance in the last generation, Samsung Electronics quickly commenced facility investments. SK hynix noted that it has confirmed the supply volume for next year after discussions with major clients like NVIDIA, and it plans to ramp up investments once profitability is assured.
As Samsung Electronics accelerates its investment in 1c DRAM facilities, it seems poised to use DRAM manufactured based on this process to supply high-bandwidth memory (HBM4) to NVIDIA successfully, potentially reversing its position in the DRAM market, where it lost its number one spot nearly 30 years ago.
◇ Samsung Electronics places bulk orders for next-generation DRAM equipment… SK hynix is 'cautious'
As generations progress, DRAM features finer processes with narrower circuit line widths. Memory semiconductor corporations utilize this to reduce the size of semiconductors and enhance integration, improving performance and power efficiency. Currently, Samsung Electronics, SK hynix, and Micron are competing with their main products being the 10 nm class fourth-generation (1a, 14 nm) and fifth-generation (1b, 11–12 nm) DRAMs. Competition in 1c DRAM is expected to intensify starting next year.
According to industry reports on the 11th, Samsung Electronics began to sequentially place orders for equipment to manufacture 1c DRAM starting in the first quarter. It is expected to start purchasing DRAM manufacturing equipment from the first half of the year and to establish production lines by the end of the year, initiating mass production. SK hynix is anticipated to begin large-scale equipment orders as early as the third quarter. Both Samsung Electronics and SK hynix have completed the production readiness approval (PRA), which is an internal procedure granted when technical standards necessary for mass production conversion are met.
To recover from the mistakes made in previous generations like 1a and 1b, Samsung Electronics has focused all its efforts on mass-producing 1c DRAM ahead of SK hynix. Samsung Electronics has faced challenges with DRAM quality issues in recent years, leading to a redesign of its DRAM that is already in mass production. This had repercussions for the quality of the HBM manufactured by stacking that DRAM, causing struggles in the HBM market and resulting in Samsung Electronics ceding its dominance in the DRAM market to SK hynix after 33 years. According to market research firm Omdia, SK hynix recorded a 36.9% share of the DRAM market in the first quarter of this year, taking the top spot, while Samsung Electronics held a 34.4% share, securing second place.
Samsung Electronics plans to apply 1c DRAM using the 1c process to HBM4. SK hynix will utilize the previous generation 1b DRAM for the same generation HBM. Samsung Electronics has taken a decisive move to apply a more advanced DRAM to gain a performance advantage over its competitors, as it has significantly lagged behind SK hynix in the HBM market. In the second quarter, Samsung Electronics delivered samples of HBM4 to its largest customer, NVIDIA, for quality testing. SK hynix delivered HBM4 samples to NVIDIA in the first quarter and is negotiating supply volumes for next year.
In SK hynix's case, it plans to place bulk orders for 1c DRAM equipment in the second half of this year. SK hynix aims to cautiously proceed with facility investments while monitoring the negotiation status with its main clients. The 1c DRAM from SK hynix is reportedly stable enough for significant facility investments. Currently, SK hynix is producing sample volumes using existing production lines. However, as it is majorly supplying 5th generation HBM (HBM3) based on 1b DRAM to clients like NVIDIA, it intends to focus on its current production while finalizing supply negotiations in the third quarter to secure profitability before investing.
◇ Samsung Electronics is focused on mass-producing 1c DRAM and HBM4… "SK hynix's position may shrink"
Experts warn that as Samsung Electronics proactively invests in 1c DRAM and stabilizes the technology for HBM4 being manufactured based on it, SK hynix's market position may become precarious. If a volume offensive and productivity competition start, Samsung Electronics' production capacity and workforce—its 'scale'—will stand out, potentially shrinking the position of SK hynix.
Yu Hoi-jun, a professor at KAIST's Department of Electrical and Electronic Engineering, noted, "Samsung Electronics has maintained its number one position by developing advanced-generation DRAM and rapidly mass-producing it to seize the market. This is because Samsung Electronics' production capacity and workforce size surpass those of its competitors. It seems that proactive investment was initiated based on the determination that the quality of DRAM has been secured following redesigns, and if stabilized for mass production and supplied to the market, it can gain a competitive edge."