Reportedly, South Korean memory giant SK Hynix has capitalized on the surging demand in the artificial intelligence (AI) and high-performance computing (HPC) markets. As per a report by ComputerBase, with its HBM and DDR5 products, SK Hynix has swiftly emerged from the slump in the memory market in 2023 and anticipates further growth. Consequently, a new phase of expansion is underway.

The report further indicates that SK Hynix plans to invest at least KRW 120 trillion (approximately USD 89.4 billion) to construct a new semiconductor production complex in Yongin, located in the central part of Gyeonggi Province, South Korea. This includes four independent fabs, with preparations currently underway, one-third of which has already been completed.

The report indicates that SK Hynix announced plans to build the world’s largest chip production facility as early as 2019. However, due to various reasons, the project was delayed until 2022 when agreements were reached with the central and local governments of South Korea, allowing the project to progress.

SK Hynix intends to commence its expansion project officially in March 2025, with the first fab scheduled for completion in 2027 and the entire complex expected to be completed by 2046. It is yet clear whether the first fab will produce DRAM or NAND Flash memory. However, given the significant demand for HBM products in the AI market, and considering SK Hynix’s tight production capacity, this is likely the direction they will choose.

HBM, a type of DRAM primarily used in AI servers, is experiencing a surge in demand worldwide, led by NVIDIA. Moreover, according to a previous TrendForce press release, the three major original HBM manufacturers held market shares as follows in 2023: SK Hynix and Samsung were both around 46-49%, while Micron stood at roughly 4-6%.

Additionally, the four planned fabs are expected to occupy half of the complex’s size, with SK Hynix also constructing numerous supporting facilities in the area, such as wastewater treatment plants and resource recycling centers. Apart from SK Hynix, Samsung has also opted to construct a similar semiconductor production complex nearby, which includes research and development centers, to meet the anticipated market demands ahead.

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(Photo credit: SK Hynix)

Chip giant NVIDIA kicked off its annual Graphics Processing Unit (GPU) Technology Conference (GTC) today, with CEO Jensen Huang announcing the launch of the new artificial intelligence chip, Blackwell B200.

According to a report from TechNews, this new architecture, Blackwell, boasts a massive GPU volume, crafted using TSMC’s 4-nanometer (4NP) process technology, integrating two independently manufactured dies, totaling 208 billion transistors. These dies are then bound together like a zipper through the NVLink 5.0 interface.

NVIDIA utilizes a 10 TB/sec NVLink 5.0 to connect the two dies, officially termed NV-HBI interface. The NVLink 5.0 interface of the Blackwell complex provides 1.8 TB/sec bandwidth, doubling the speed of the NVLink 4.0 interface on the previous generation Hopper architecture GPU.

As per a report from Tom’s Hardware, the AI computing performance of a single B200 GPU can reach 20 petaflops, whereas the previous generation H100 offered a maximum of only 4 petaflops of AI computing performance. The B200 will also be paired with 192GB of HBM3e memory, providing up to 8 TB/s of bandwidth.

NVIDIA’s HBM supplier, South Korean chipmaker SK Hynix, also issued a press release today announcing the commencement of mass production of its high-performance DRAM new product, HBM3e, with shipments set to begin at the end of March.

Source: SK Hynix

Recently, global tech companies have been heavily investing in AI, leading to increasing demands for AI chip performance. SK Hynix points out that HBM3e is the optimal product to meet these demands. As memory operations for AI are extremely fast, efficient heat dissipation is crucial. HBM3e incorporates the latest Advanced MR-MUF technology for heat dissipation control, resulting in a 10% improvement in cooling performance compared to the previous generation.

Per SK Hynix’s press release, Sungsoo Ryu, the head of HBM Business at SK Hynix, said that mass production of HBM3e has completed the company’s lineup of industry-leading AI memory products.

“With the success story of the HBM business and the strong partnership with customers that it has built for years, SK hynix will cement its position as the total AI memory provider,” he stated.

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(Photo credit: NVIDIA)

According to a report from the South Korean newspaper “Korea Joongang Daily,” following Micron’s initiation of mass production of the latest high-bandwidth memory HBM3e in February 2024, it has recently secured an order from NVIDIA for the H200 AI GPU. It is understood that NVIDIA’s upcoming H200 processor will utilize the latest HBM3e, which are more powerful than the HBM3 used in the H100 processor.

The same report further indicates that Micron secured the H200 order due to its adoption of 1b nanometer technology in its HBM3e, which is equivalent to the 12-nanometer technology used by SK Hynix in producing HBM. In contrast, Samsung Electronics currently employs 1a nanometer technology, which is equivalent to 14-nanometer technology, reportedly lagging behind Micron and SK Hynix.

The report from Commercial Times indicates that Micron’s ability to secure the NVIDIA order for H200 is attributed to the chip’s outstanding performance, energy efficiency, and seamless scalability.

As per a previous report from TrendForce, starting in 2024, the market’s attention will shift from HBM3 to HBM3e, with expectations for a gradual ramp-up in production through the second half of the year, positioning HBM3e as the new mainstream in the HBM market.

TrendForce reports that SK Hynix led the way with its HBM3e validation in the first quarter, closely followed by Micron, which plans to start distributing its HBM3e products toward the end of the first quarter, in alignment with NVIDIA’s planned H200 deployment by the end of the second quarter.

Samsung, slightly behind in sample submissions, is expected to complete its HBM3e validation by the end of the first quarter, with shipments rolling out in the second quarter. With Samsung having already made significant strides in HBM3 and its HBM3e validation expected to be completed soon, the company is poised to significantly narrow the market share gap with SK Hynix by the end of the year, reshaping the competitive dynamics in the HBM market.

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(Photo credit: Micron)

According to a report by the South Korean news outlet The Chosun Daily, Samsung Electronics’ memory business has managed to endure the market downturn from last year. Recently, its strategy of reducing production has finally paid off, driving up chip prices.

Reports suggest that in the first quarter of this year, Samsung plans to raise NAND Flash chip prices by up to 20%, aiming to restore profitability to its memory chip business.

The report quotes a semiconductor industry source as saying, “The first-quarter price negotiations between major memory manufacturers such as Samsung Electronics and SK Hynix and their customers have not yet been concluded. However, customers are rushing to secure supplies as the price of NAND flash has been steadily increasing, and fears spread that NAND flash cuts will continue this year.”

As per the report citing sources, Samsung Electronics will renegotiate prices with major mobile, PC, and server customers in March and April this year. It is expected to push for a price increase of 15 to 20%.

As per a report from Commercial Times, the global economic downturn last year led to an oversupply of memory and a sharp decline in prices, resulting in severe losses for Samsung and SK Hynix’s memory businesses. Samsung’s memory division experienced its first-ever losses last year, dragging down the company’s overall profits to a new low.

Samsung, Micron, and SK Hynix, the three major players in the memory industry, began significant production cuts in the second half of last year, finally causing DRAM chip prices to rebound. However, the NAND Flash chip market is crowded with many manufacturers, including not only the three major players but also Japanese Kioxia and American Western Digital, leading to less significant effects from the production cuts.

Last year, Samsung’s NAND Flash chip business incurred operating losses of KRW 11 trillion (approximately USD 8.3 billion), while SK Hynix’s NAND Flash chip business also faced operating losses of 8 trillion Korean won. Since the second half of last year, the aforementioned companies have halved their production capacities, finally pushing NAND Flash prices up.

Per TrendForce’s data, NAND flash prices have increased for five consecutive months. TrendForce research previously indicated that despite facing a traditional low-demand season, buyers are continuing to increase their purchases of NAND Flash products to establish safe inventory levels. In response, suppliers, aiming to minimize losses are pushing for higher prices, leading to an estimated 15–20% increase in NAND Flash contract prices in 1Q24.

Currently, the NAND Flash market is still dominated by the five major manufacturers, with Samsung and SK Hynix accounting for the lion’s share.

Samsung still firmly held the top position in the NAND Flash market, with its market share increasing from 31.4% in the previous quarter to 36.6%; next was SK Group, with its market share increasing from 20.2% in the previous quarter to 21.6%.

Following them were Western Digital, whose market share decreased from 16.9% in the previous quarter to 14.5%, Kioxia, whose market share decreased from 14.5% in the previous quarter to 12.6%, and Micron, whose market share decreased from 12.5% in the previous quarter to 9.9%.

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(Photo credit: Samsung)

With numerous cloud computing companies and large-scale AI model manufacturers investing heavily in AI computing infrastructure, the demand for AI processors is rapidly increasing. As per a report from IJIWEI, the demand for HBM (High Bandwidth Memory), a key component among them, has been on the rise as well.

Amid the opportunity brought about by the surge in demand for computing power, which has in turn created a wave of opportunities for storage capabilities, when looking at the entire HBM industry chain, the number of China’s local companies which are able to enter the field is limited.

Faced with significant technological challenges but vast prospects, whether from the perspective of independent controllability or market competition, it is imperative to accelerate the pace of catching up.

HBM Demand Grows Against the Trend, Dominated by Three Giants

The first TSV HBM product debuted in 2014, but it wasn’t until after the release of ChatGPT in 2023 that the robust demand for AI servers drove rapid iterations of HBM technology in the order of HBM1, HBM2, HBM2e, HBM3, and HBM3e.

The fourth-generation HBM3 has been mass-produced and applied, with significant improvements in bandwidth, stack height, capacity, I/O speed, and more compared to the first generation. Currently, only three storage giants—SK Hynix, Samsung Electronics, and Micron—are capable of mass-producing HBM.

According to a previous TrendForce press release, the three major original HBM manufacturers held market shares as follows in 2023: SK Hynix and Samsung were both around 46-49%, while Micron stood at roughly 4-6%.

In 2023, the primary applications in the market were HBM2, HBM2e, and HBM3, with the penetration rate of HBM3 increasing in the latter half of the year due to the push from NVIDIA’s H100 and AMD’s MI300.

According to TrendForce’s report, SK Hynix led the way with its HBM3e validation in the first quarter, closely followed by Micron, which plans to start distributing its HBM3e products toward the end of the first quarter, in alignment with NVIDIA’s planned H200 deployment by the end of the second quarter.

Samsung, slightly behind in sample submissions, is expected to complete its HBM3e validation by the end of the first quarter, with shipments rolling out in the second quarter.

Driven by market demand, major players such as SK Hynix, Samsung, and Micron Technology are increasing their efforts to expand production capacity. SK Hynix revealed in February that all its HBM products had been fully allocated for the year, prompting preparations for 2025 to maintain market leadership.

Reportedly, Samsung, aiming to compete in the 2024 HBM market, plans to increase the maximum production capacity to 150,000 to 170,000 units per month before the end of the fourth quarter of this year. Previously, Samsung also invested KRW 10.5 billion to acquire Samsung Display’s factory and equipment in Cheonan, South Korea, with the aim of expanding HBM production capacity.

Micron Technology CEO Sanjay Mehrotra recently revealed that Micron’s HBM production capacity for 2024 is expected to be fully allocated.

Although the three major HBM suppliers continue to focus on iterating HBM3e, there is still room for improvement in single-die DRAM and stacking layers. However, the development of HBM4 has been put on the agenda.

Trendforce previously predicted that HBM4 will mark the first use of a 12nm process wafer for its bottommost logic die (base die), to be supplied by foundries. This advancement signifies a collaborative effort between foundries and memory suppliers for each HBM product, reflecting the evolving landscape of high-speed memory technology.

Continuous Surge in HBM Demand and Prices, Local Supply Chains in China Catching Up

In the face of a vast market opportunity, aside from the continuous efforts of the three giants to ramp up research and production, some second and third-tier Chinese DRAM manufacturers have also entered the HBM race. With the improvement in the level of locally produced AI processors, the demand for independent HBM supply chains in China has become increasingly urgent.

Top global manufacturers operate DRAM processes at the 1alpha and 1beta levels, while China’s DRAM processes operate at the 25-17nm level. China’s DRAM processes are approaching those overseas, and there are advanced packaging technology resources and GPU customer resources locally, indicating a strong demand for HBM localization. In the future, local DRAM manufacturers in China are reportedly expected to break through into HBM.

It is worth noting that the research and manufacturing of HBM involve complex processes and technical challenges, including wafer-level packaging, testing technology, design compatibility, and more. CoWoS is currently the mainstream packaging solution for AI processors, and in AI chips utilizing CoWoS technology, HBM integration is also incorporated.

CoWoS and HBM involves processes such as TSV (Through-Silicon Via), bumps, microbumps, and RDL (Redistribution Layer). Among these, TSV accounts for the highest proportion of the 3D packaging cost of HBM, close to 30%.

Currently, China has only a few leading packaging companies such as JCET Group, Tongfu Microelectronics, and SJSemi that possess the technology (such as TSV through-silicon via) and equipment required to support HBM production.

However, despite these efforts, the number of Chinese companies truly involved in the HBM industry chain remains limited, with most focusing on upstream materials.
With GPU acquisition restricted, breakthroughs in China’s AI processors are urgently needed both from its own self-sufficiency perspective and in terms of market competition. Therefore, synchronized breakthroughs in HBM are also crucial from Chinese manufacturers.

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(Photo credit: SK Hynix)