Samsung Electronics DS (semiconductor) institutional sector, which is expected to post record results this year, is concerned that the super-boom caused by a shortage in memory chip supply could last about one to two years and then slip back into a downturn. As uncertainty in demand forecasts has grown after the frenzy of investment in artificial intelligence (AI) infrastructure, the company is also grappling with whether to expand production facilities. That is because in the past, failed demand forecasts led to overinvestment that boomeranged into massive losses.
According to the industry on the 13th, Samsung Electronics DS institutional sector management, along with the Business Support Task Force, is said to be keeping in mind the possibility that the global memory chip market could turn starting in 2028. While maximizing profitability from the AI boom, improving business efficiency to mitigate the risk of overinvestment has emerged as a critical task.
It means that while pushing ahead with large-scale investments in the next-generation high-bandwidth memory (HBM) lineup and advanced process transitions, contingency plans for an unpredictable slump in demand have become urgent. Analysts also say that since the AI boom, memory demand has become irregular and supply cycles shorter, making it harder to determine the exact production scale and the investments needed.
For this year, there is little room for disagreement that more DRAM and HBM volume is needed. Big Tech companies including Nvidia, AMD and Broadcom are likely to sustain HBM demand through next year, and at both Samsung Electronics and SK hynix, which dominate DRAM, more than half of total DRAM revenue is coming from HBM. The two companies are allocating more and more volume to HBM, leading to shortages of DRAM for smartphones, PCs and servers.
Samsung Electronics is carrying out a transition to next-generation DRAM processes at its Hwaseong site while also adding new production lines. The industry expects that through this year Samsung Electronics will continue the transition to 5th-generation 10-nanometer (1b) DRAM processes, and, by expanding new lines centered on the Pyeongtaek plant, move to secure production capacity for 6th-generation 10-nanometer (1c) DRAM.
SK hynix, despite limited space constraints, is also pressing ahead with aggressive investment plans. The company is working to expand memory production capacity around its key bases in Icheon, Cheongju and Yongin. In particular, at the new M15X plant, construction of a next-generation DRAM production line is underway.
The government-led project to build the Yongin semiconductor cluster is also expected to be a turning point for the two corporations' production capacity expansion. The Yongin cluster is set to become a core production base for Korea's semiconductor industry, with infrastructure development and plant construction progressing in phases. The industry expects that after the first-phase investment in the Yongin cluster, additional plant construction and mass production will begin, and in 2028, second-phase investment could further expand production space.
The key point is that Micron in the United States is pushing to expand DRAM production lines, while Kioxia in Japan and YMTC in China are moving to expand NAND flash production lines. Micron is adding DRAM production lines in Taiwan, Singapore and the United States, and since last year has placed large equipment orders to increase HBM volume. Given that it typically takes about two years to build production lines, from 2028 the production capacity of all memory corporations—including Samsung Electronics, SK hynix and Micron—will effectively be upgraded by one tier.
For NAND flash, some expect that at the current pace, a supply glut could arrive faster than for DRAM. While DRAM is a three-way race among Samsung Electronics, SK hynix and Micron, in NAND flash not only those three corporations but also Kioxia and China's YMTC have boosted their technology and capacity, adding more players to the market. As a result, in recent years price competition in NAND has intensified, and even Samsung Electronics and SK hynix have been unable to avoid losses.
A source familiar with Samsung said, "As recently as last summer, neither Samsung Electronics nor SK hynix could have predicted this boom at all, making it difficult to forecast the chip market and draw up investment plans," and noted, "This is why Samsung's Business Support Task Force is deliberating investments that match rigorous vetting and market forecasts."