[News] Amid Foundry Overcapacity, Competition for HBM Intensifies Rapidly

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As AI semiconductor competition intensifies, the wafer foundry industry faces new challenges due to stagnant demand and excess capacity. The battle for dominance in the high-bandwidth memory (HBM) market is also escalating.

According to Business Korea, Samsung has extended the operation time of its Taylor plant from the end of 2024 to 2026, possibly adjusting the investment pace in consideration of the foundry market.

Regarding the global wafer foundry industry outlook for this year, TSMC President C.C. Wei stated that the growth of the global foundry industry this year has been revised from the previous earnings call of 20% to mid-teens.

Currently, TSMC’s two fabs in Arizona, USA, are scheduled to commence production in 2025 and 2028, respectively; the Kumamoto fab in Japan has started operations in February, and the second fab will start production before 2027. Intel, on the other hand, plans to establish new foundries in the United States, Europe, and Israel. The activation of these new fabs has raised concerns in the market about oversupply issues.

Contrastingly, in the HBM market, crucial for AI chips, SK Hynix and TSMC have formed an alliance, intensifying the competition between this alliance and Samsung.

SK Hynix announced on April 19th that the company has recently signed a memorandum of understanding with TSMC for collaboration to produce next-generation HBM and enhance logic and HBM integration through advanced packaging technology. The company plans to proceed with the development of HBM4, or the sixth generation of the HBM family, slated to be mass produced from 2026, through this initiative.

Looking at Samsung’s developments in the HBM, Samsung Electronics successfully developed the industry’s first highest-capacity 12-layer HBM3E in February, attempting to regain market dominance. In the second quarter, along with the 8-layer product, it will supply to Nvidia. The next goal is to launch the 16-layer HBM4.

Per TrendForce’s data, the three major HBM manufacturers held market shares are as follows: In 2023, SK Hynix and Samsung each held around 47.5%, while Micron’s share was roughly 5%. Still, forecasts indicate that SK Hynix’s market share in 2024 will increase to 52.5%, while Samsung’s will decrease to 42.4%.

In line with the same report from Business Korea, despite the decline in foundry demand, Samsung Electronics and SK Hynix’s profit prospects are expected to improve compared to last year.

As per estimates cited in the report from investment institutions, SK Hynix’s first-quarter revenue is expected to reach 12.1021 trillion won, with an operating profit of 1.7654 trillion won, and the operating profit for the entire year of 2024 is expected to exceed 21 trillion won; Samsung Electronics’ DS division’s performance is improving, with the first-quarter operating profit expected to be between 700 billion and 1.8 trillion won, and the overall operating profit for 2024 is expected to be around 35 trillion won.

(Photo credit: SK Hynix)