Demand for High Bandwidth Memory (HBM), a critical component in AI semiconductors, is surging, positioning industry leaders such as SK Hynix and Samsung Electronics for advantageous negotiations. Talks for next year’s HBM supply have begun, with manufacturers seeking early price increases.
According to TrendForce, HBM demand is expected to nearly double this year, with projections indicating a further doubling next year. This translates to an increased share of HBM in the overall DRAM bit capacity, rising from 2% last year to 5% this year and potentially exceeding 10% next year.
Revenue-wise, HBM’s market share is rapidly expanding, with prices approximately five times that of DDR5 DRAM. This is anticipated to increase HBM’s slice of the total DRAM revenue from 8% last year to an estimated 21% this year, potentially surpassing 30% next year.
The uptick in HBM demand is not solely driven by tech giants but also by a global push to develop AI language models. Companies like NVIDIA, commanding over 90% of the AI semiconductor market, are enhancing GPU capacities with HBM. Similarly, competitors like AMD are also integrating HBM into their products.
According to Ryu Hyung-keun, a researcher at Samsung Securities, “In addition to big tech players, software firms and countries worldwide are contributing to the robust demand for HBM.” He further noted, “While this year’s HBM supply is anticipated to exceed initial estimates at 12 billion Gb, next year’s forecast is even more optimistic, reaching 23 to 24 billion Gb, though actual demand may surpass this.”
In response to demand outstripping supply, manufacturers are proactively raising HBM prices. Negotiations for next year’s supply began in the second quarter, resulting in a 5-10% price increase for HBM 3-5 generations.
Avril Wu, Senior Vice President at TrendForce, explained, “Despite the price hikes, HBM buyers, recognizing the high demand in AI, are willing to pay more for stability and quality.” She emphasized, “With limited suppliers capable of meeting current standards for HBM3E, customers are accepting higher prices to ensure a steady supply of quality products.”
Both SK Hynix and Samsung Electronics are expanding production capacities in response to the surge in demand. SK Hynix’s CEO, Kwak Noh-jung, announced efforts to expand production facilities with a new fab in Cheongju, North Chungcheong Province.
Meanwhile, Samsung Electronics Executive Vice President, Kim Jae-joon, revealed plans to supply at least twice as much as this year by 2025, with negotiations with customers proceeding smoothly.
Ryu added, “With HBM demand soaring and the potential for substantial revenue, manufacturers are rapidly expanding production capacities.” He concluded, “This year’s total HBM production capacity has already increased by 3.2 times compared to last year, with expectations of a 1.4 times increase next year.”
