Thanks to the rebound in memory chip demand amid accelerated global AI development, Samsung Electronics reported its strongest sales and profit growth in years. According to its financial guidance announced on July 5th, the semiconductor giant projects its operating profit to grow more than 15-fold YoY to 10.4 trillion won (USD 7.5 billion) in its preliminary results for the April-June quarter, outstripping market expectations.

In addition, the company expects its sales to increase by approximately 23% to 74 trillion won. According to a report from Bloomberg, this marks the largest rise since the peak levels seen during the Covid-19 pandemic in 2021.

The forecast is way better than LSEG SmartEstimate’s earlier forecast, which expected Samsung Electronics’ operating profit for Q2 2024 to reach 8.8 trillion won (roughly USD 6.34 billion).

Samsung is scheduled to release final earnings, including divisional breakdowns, on July 31.

It is also worth noting that Samsung is releasing its results just days ahead of planned three-day walkouts by union organizers, starting from July 8th. According to Bloomberg, the move would involve over 28,000 members, including those at crucial chip plants, due to a wage dispute. The extent of participation in Monday’s walkout remains uncertain at this time.

Citing market sources, the report noted that Samsung’s Q2 financial results highlight the memory market’s robust recovery this year from a sharp decline post-Covid, driven by increased demand from data centers and AI development, which contributes to a turnaround in Samsung’s largest division, which had incurred losses the previous year.

According to TrendForce, Samsung’s global share of DRAM and NAND Flash output in 2023 was 46.8% and 32.4%, respectively. An earlier report by the Korea Economic Daily indicated that Samsung’s HBM production has been sold out in 2024.

According to the latest forecast by Trendforce, the HBM market is poised for robust growth, driven by significant pricing premiums and increased capacity needs for AI chips. HBM prices are expected to Increase by 5–10% in 2025.

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(Photo credit: Samsung)

According to TrendForce’s latest memory spot price trend report, the spot price of DRAM has finally seen a slight raise as supply for DDR4 and DDR5 tightens. Samsung has allocated more of its 1alpha nm production capacity to the manufacturing of HBM products, which leads to DDR5’s price increase. As for NAND flash, transactions within the spot market remain sluggish. Details are as follows:

DRAM Spot Price:

In the spot market, there has been a slight decrease in the supply of used DDR4 chips that were originally stripped from decommissioned modules. Moreover, spot prices of DDR4 chips had already dropped to a low of US$0.9 at the end of 2023, so there has been a modest rebound recently. However, there has not been a significant rebound in the demand for consumer electronics. As a result, the price increase for DDR4 chips is expected to be limited. As for DDR5 products, the supply has tightened primarily because Samsung has allocated more of its 1alpha nm production capacity to the manufacturing of HBM products. Additionally, there have been special cases of buyers requesting quotes for DDR5 products recently. Consequently, prices of DDR5 products have registered a slight rise. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) has risen by 1.07% from US$1.875 last week to US$1.895 this week.

NAND Flash Spot Price:

Transactions within the spot market are currently at a sluggish stage, and the occasional appearance of rush orders are unable to provide a support for price increases. It is worth noting that spot traders and several module houses are fighting for orders by cutting down their prices sporadically due to pressure from inventory and funds. On the whole, module houses are still actively seeking for buyer orders in the hope of seeing a need of inventory replenishment during the traditional peak season that is 3Q24. Spots of 512Gb wafers have dropped by 0.33% this week, arriving at US$3.291.

According to a report from South Korean media Maeil Business Newspaper, Samsung Electronics plans to raise prices for server DRAM and enterprise NAND flash by 15% to 20% in the third quarter due to surging demand for artificial intelligence (AI). This move is expected to improve the company’s performance in the second half of the year, while boosting momentum for some Taiwanese companies like Nanya Technology, ADATA, TeamGroup and Transcend in the coming quarters.

Industry sources cited by a report from Economic Daily News believe that with manufacturers defending prices, there is strong support for the market. Additionally, as the three major manufacturers focus on developing high-bandwidth memory (HBM), which limits the output of DDR4 and DDR3, it helps maintain a healthy state for the DRAM industry.

Per Maeil Business Newspaper, sources have revealed on June 26th that Samsung Electronics has recently notified major customers about the planned price increase. The Device Solutions (DS) division, responsible for Samsung’s semiconductor business, held a global strategy meeting at its Hwaseong plant in Gyeonggi-do on the same day, where this matter was discussed.

The report further stated that Samsung Electronics had already increased the prices of NAND flash supplied to enterprises by at least 20% in the second quarter, anticipating that the AI boom will drive higher server demand in the second half of the year.

According to data from DRAMeXchange, the global sales of enterprise NAND flash reached $3.758 billion in the first quarter of this year, marking a 62.9% increase from the previous quarter. With the rising demand, some products are experiencing shortages.

TrendForce also notes that with a slight improvement in server demand, Samsung has indicated it will adopt a more aggressive pricing strategy for server DRAM and enterprise SSDs for 3Q24 deals. TrendForce’s price projections posit that server DRAM prices are expected to increase by more than 10% QoQ, with enterprise SSDs enjoying a similar price range. However, due to sluggish smartphone demand, price increases in mobile categories are expected to be more modest.

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• [Insights] Memory Spot Price Update: DRAM Remains Weak Despite Samsung’s Capacity Shift to HBM
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(Photo credit: Samsung)

According to TrendForce’s latest memory spot price trend report, the spot price of DRAM remains weak, as Samsung’s reallocation of its D1A process to the manufacturing of HBM products did little help. As for NAND flash, overall transactions are also sitting on the enervated end due to weakening market demand. Details are as follows:

DRAM Spot Price:

A fire-related incident occurred at Micron’s fab in Taichung on June 20th, but no actual losses (in bit terms) have been reported. In response to this event, module houses did temporarily suspend quoting, but they soon resumed trading activities. Overall, the event has had no positive effect on the spot price trend, which remains relatively weak. Similar to last week, spot trading has been fairly tepid, and prices of DDR4 products have fallen more significantly compared to DDR5 products. With Samsung reallocating its D1A process to the manufacturing of HBM products, spot prices of DDR5 products have actually experienced sporadic hikes for a while. Mainstream die DDR4 1Gx8 2666 MT/s saw a price increase of 1.36% this week (US$1.835 to US$1.860).

NAND Flash Spot Price:

Module houses have started adopting even more aggressive pricing strategies to effectively control their inventory, though overall transactions are sitting on the enervated end due to weakening market demand. TrendForce believes that inventory pressure would continue to bring down spot prices, which dropped to US$3.302 for 512Gb TLC wafers this week at a 0.21% reduction.

Recently, it was reported that to meet the increasing demand for memory chips driven by the artificial intelligence (AI) boom, both Samsung Electronics and Micron set about ramping up their memory chip production capacity. Samsung plans to restart construction of the new Pyeongtaek plant (P5) infrastructure as early as 3Q24. Micron is building HBM testing and mass production lines at its headquarters in Boise, Idaho, U.S. and is considering producing HBM in Malaysia for the first time to meet the growing demand brought by the AI surge.

Samsung Restarts the Construction of P5 Plant

As per foreign media reports, Samsung has decided to restart the construction of the P5 infrastructure, which is expected to resume as early as 3Q24 and be completed in April 2027, though the actual date of starting production could be earlier.

Previously, P5 reportedly suspended construction at the end of January, which was said to be a temporary measure to coordinate progress, with investment not yet been finalized, as stated by Samsung at that time. Industry analysts interpret Samsung’s decision to resume P5 construction as a response to the AI-driven surge in demand for memory chip.

It is reported that the Samsung P5 plant is a large wafer fab with eight cleanrooms, while P1 to P4 only have four respectively, which makes Samsung’s plan to achieve large-scale production to meet market demand possible. However, no official announcement regarding the specific use of P5 has been disclosed so far.

According to Korean media reports, industry sources stated that Samsung held an internal management committee conference of the board of directors on May 30, during which they submitted and passed the agenda for the P5 infrastructure construction. The management committee was chaired by CEO and head of the DX division, Jong-hee Han, involving other members such as MX business head Noh Tae-moon, management support director Park Hak-gyu, and head of the memory business division Lee Jeong-bae.

Hwang Sang-joong, vice president and head of DRAM Product and Technology at Samsung, stated in March this year that HBM output for this year was expected to be 2.9 times that of last year. The company also announced its HBM roadmap, projecting that HBM shipment in 2026 would be 13.8 times the 2023 output, and by 2028, the annual HBM output would further increase to 23.1 times the 2023 level.

Micron Builds HBM Testing and Mass-Production Lines in the U.S.

On June 19, multiple media reported that Micron is building HBM testing and mass production lines at its headquarters in Boise, Idaho, and is considering producing HBM in Malaysia for the first time to meet the increased demand driven by the AI boom. Micron’s Boise wafer fab is reportedly to put into operation in 2025 and start DRAM production in 2026.

Previously, Micron announced plans to increase its HBM market share from the current “mid-single digits” to around 20% within a year. As of now, Micron has been expanding its memory capacity in various locations.

At the end of April, Micron officially announced that it had received USD 6.1 billion of government subsidies from the U.S. CHIPS and Science Act. These funds, along with additional state and local incentives, will support Micron in building a leading DRAM memory manufacturing plant in Idaho and two advanced DRAM memory manufacturing plants in Clay, New York.

The Idaho plant commenced construction in October 2023. Micron revealed that the plant is expected to run in 2025 and start DRAM production in 2026, with DRAM output increasing in line with industry demand. The New York project is in the phase of initial design, field study, and license application (NEPA application included). Construction of the wafer fab is expected to begin in 2025 and production in 2028, which will increase depending on market demand over the next decade. The press release noted that the U.S. government’s subsidies will support Micron’s plan to invest around USD 50 billion of total capital expenditures to lead domestic memory manufacturing by 2030.

In May, Japanese media Nikkan Kogyo Shimbun reported that Micron will pour JPY 600 to 800 billion to build an advanced DRAM chip plant using EUV lithography in Hiroshima, Japan. Construction is expected to start in early 2026 and be completed in late 2027 at the earliest. Japan had previously approved up to JPY 192 billion of subsidies to support Micron’s plant construction and next-generation chip production in Hiroshima.

The new Micron plant in Hiroshima will be located near the existing Fab 15, focusing on DRAM production, excluding back-end packaging and testing, with priority given to the fabrication of HBM products.

In October 2023, Micron inaugurated its second smart (Advanced assembly and test) plant in Penang, Malaysia, with an initial investment of USD 1 billion. Following the completion of the first plant, Micron allocated an additional USD 1 billion to expand the second smart plant, expanding its building area to 1.5 million square feet.

(Photo credit: Samsung)