Samsung Electronics and SK Hynix are poised to resume investment in DRAM plant and equipment after nearly a year of cutting back on production in response to an industry slowdown. Domestic semiconductor equipment companies are looking forward to a surge in orders as South Korea’s two leading memory chipmakers expand DRAM production.
DRAM, short for dynamic random access memory, is a memory chip used in computers, smartphones, and servers. Samsung Electronics and SK Hynix account for almost 70% of global DRAM production.
Samsung Electronics plans to boost production at its chip manufacturing facility, the Pyeongtaek P3 plant, by 30,000 wafers per month in the first half of the year, according to sources familiar with the matter on Feb. 29. The Pyeongtaek P4 plant is set to wrap up construction in the second half of the year, followed by the introduction of new equipment.
SK Hynix aims to repurpose its M14 fab by relocating its NAND flash production facility and replacing the space with advanced 10-nanometer technology DRAM manufacturing facilities.
The DRAM market is recovering as the global artificial intelligence (AI) boom drives up memory chip demand. Market research firm TechInsights forecasts the global DRAM market to grow over 50% year-on-year in 2024. Spot market prices for DRAM have been rising for five consecutive months, according to market research firm DRAMeXchange.
Industry insiders expect Samsung Electronics and SK Hynix to increase investment in DRAM production capabilities against a backdrop of a memory chip market rebound. Both companies aim to enhance competitiveness in advanced DRAM products like DDR5 and high-bandwidth memory (HBM).
“Samsung Electronics will probably boost DRAM investment in the vacant space in its P3 plant and the new P4 plant to strengthen its position in the DRAM market,” said Kim Kwang-jin, an analyst at Hanwha Securities & Investment. “SK Hynix is also likely to increase investment in necessary equipment to maintain competitiveness in the DRAM sector.”
Semiconductor equipment companies are expected to benefit from Samsung Electronics and SK Hynix’s investments. Even as the memory chip industry suffered a downturn last year, downstream semiconductor equipment companies sustained orders as HBM chip demand grew. While downstream equipment companies specializing in the packaging process that ensures the stability and efficiency of HBM chips fared better, upstream equipment manufacturers have yet to benefit from the HBM production expansion cycle.
Korean upstream semiconductor equipment manufacturers, including Jusung Engineering, Eugene Technology, and Wonik IPS, reported significant drops in operating profits.
Analysts anticipate a turnaround for these equipment manufacturers this year. “With major customers expanding investment in upstream technologies, equipment companies are expected to experience a significant increase in operating profits,” said Kyobo Securities analyst Kim Min-chul.
