[Chip Talk] "Can't Yield the HBM Throne"... The Tension Between K-Semiconductor Big 2

Samsung Electronics and SK Hynix Compete to Dominate HBM Market
High-Performance, High-Capacity Memory Essential in AI Era
5th Generation HBM Development Will Determine the Ultimate Winner

Samsung Electronics and SK Hynix are engaging in full-scale competition to dominate the HBM (High Bandwidth Memory) market. SK Hynix, which was the first to mass-produce HBM3 (4th generation), is leading the market by securing Nvidia, the world's largest graphics processing unit (GPU) company, as a customer. However, the situation will change once Samsung Electronics begins mass production of HBM3 in September and supplies 5th generation HBM prototypes to customers. Both companies are aiming to rebound their performance in the memory semiconductor market, which is currently in a downturn, by leveraging HBM, a high-performance DRAM.

On the 10th, the semiconductor industry viewed the HBM market, led by Samsung Electronics and SK Hynix, as being in its early formation stage, where the key factor is who can quickly capture and dominate the market. Both companies are showing moves to strengthen their HBM competitiveness and secure customers, leading to a tense battle for the top market share 'throne.' This is because HBM has emerged as a new growth engine to overcome the slump in the memory semiconductor market.

HBM is a next-generation DRAM product attracting attention. Its characteristic is stacking single DRAM chips vertically to significantly improve data processing speed. For large-capacity data processing, which has become essential due to the AI (artificial intelligence) boom, high-performance and high-capacity memory HBM is indispensable. In particular, it is priced from twice to up to five times higher than general DRAM, making it highly profitable. This is why memory semiconductor companies, which recently recorded operating losses, have no choice but to focus on HBM.

Market research firm TrendForce reported that as of the end of last year, the global HBM market share was SK Hynix 50%, Samsung Electronics 40%, and Micron 10%. This year, it predicted that SK Hynix, the only company mass-producing HBM3, would increase its share to 53%, while Samsung Electronics' share might drop to 38%.

However, Samsung Electronics directly refuted the statistics that SK Hynix holds the No. 1 global market share in HBM. Kyung Kye-hyun, President and CEO of Samsung Electronics' DS (Device Solutions) Division, said at the company’s internal communication event, WeTalk, on the 5th, "Samsung's HBM products still hold a market share of over 50%," adding, "Recently, HBM3 (sample) products have received excellent evaluations from customers." He emphasized, "HBM3 and HBM3P will contribute to the DS division's profit growth next year." This was interpreted as a statement dismissing concerns about Samsung Electronics' competitiveness in memory semiconductors raised by some quarters.

Samsung Electronics and SK Hynix have been competing fiercely for market leadership since SK Hynix first developed HBM with AMD in 2013. Two years later, in 2015, Samsung Electronics succeeded in developing the 2nd generation HBM, HBM2, and overwhelmingly captured market share. At that time, SK Hynix quickly focused on developing the 3rd generation (HBM2E) and 4th generation (HBM3), regaining leadership.

Currently, SK Hynix is the only DRAM manufacturer worldwide mass-producing HBM3. SK Hynix began full-scale HBM development in 2013 and first mass-produced the 4th generation product, 'HBM3,' in June last year, the industry's first. In April this year, it also developed a new HBM3 product that vertically stacks 12 individual DRAM chips to achieve the highest capacity of 24GB (gigabytes) currently available, and it is now undergoing customer verification.

SK Hynix is also moving quickly on follow-up product development. It is developing the next-generation model, HBM3E, aiming for mass production in the first half of next year. SK Hynix Vice Chairman Park Jung-ho attended the SK Group's expanded management meeting last month and said, "With the expansion of the AI market, HBM demand is increasing, and we have a positive outlook for the market in the second half of this year."

Samsung Electronics is also responding to HBM3 demand. It plans to mass-produce HBM3 products in the second half of the year and has recently filed trademark registrations for next-generation HBM product names presumed to be 'Snowbolt,' 'Shinebolt,' and 'Flamebolt.' Currently, it has shipped samples of HBM3 16GB and 12-layer 24GB products, and plans to introduce the 5th generation HBM product, HBM3P, within the year to meet market demands. It also plans to significantly expand HBM production capacity by the end of next year through increased facility investment.

Kim Dong-won, head of KB Securities Research Center, said, "Samsung Electronics is expected to officially enter the AI server memory market starting with HBM3 supply in the fourth quarter of this year," adding, "The proportion of HBM3 sales in Samsung Electronics' total DRAM sales is expected to expand from 6% this year to 18% next year, so a significant performance improvement is anticipated in the second half."

The industry believes that the company that first releases the 5th generation HBM among SK Hynix and Samsung Electronics will gain the upper hand once again. Both companies are developing 5th generation HBM targeting mass production next year. SK Hynix is reported to have recently provided samples of the 5th generation HBM3E to multiple North American customers. Samsung Electronics has also provided 4th generation HBM3 samples to many customers and is developing 5th generation products HBM3P and HBM4, which offer higher performance.

So far, HBM accounts for a negligible portion of the overall DRAM market. The market is still in its early formation stage. However, its growth potential is clear. TrendForce estimated that global HBM demand will reach 290 million GB this year, nearly a 60% increase from last year, and is expected to grow another 30% next year. TrendForce explained, "The current driving force behind the increasing HBM demand is AI servers equipped with Nvidia GPUs and large cloud service providers such as Google and Amazon Web Services (AWS), which are developing their own application-specific integrated circuits (ASICs)."