Stronger-Than-Expected Semiconductor Demand... "Supply Shortage Projected" [Click e-Stock]

Demand for HDDs and SSDs Surges
Supply Shortage Directly Driving Up Prices

There are projections that a supply shortage will occur as semiconductor demand proves to be stronger than expected. It is anticipated that the upward trend in performance for domestic semiconductor companies such as Samsung Electronics and SK Hynix will continue.

On September 19, KB Securities cited this background in naming Samsung Electronics and SK Hynix as its top semiconductor stock picks.

First, server-related demand is driving up memory prices. Since the beginning of this month, the spot price of 16-gigabit (Gb) DDR5 has risen by 8.2 percent. DDR4 16Gb and 8Gb have also increased by 14.3 percent and 14.6 percent, respectively. The spot price of DRAM, which is mainly used in high-capacity servers, is rising significantly more than that of general-purpose DRAM. This indicates that the current upward trend in memory prices is being fueled by server demand.

The spot prices of 1-terabyte (Tb) quad-level cell (QLC) and triple-level cell (TLC) wafers have also increased by 15 percent and 19 percent, respectively, compared to the beginning of the year. Global big tech companies are recording all-time high revenues as artificial intelligence (AI) inference services expand. As a result, demand for high-capacity hard disk drives (HDDs) and enterprise solid-state drives (eSSDs) is expected to continue increasing.

In particular, as the expansion of AI inference accelerates the shift from HDDs to nearline SSDs, QLC NAND-based eSSDs are expected to see significant growth. In the future, the expansion of inference areas driven by image generation services such as Nanobanana is expected to stimulate memory demand. If the Stargate Project resumes following the 416 trillion won contract signed between OpenAI and Oracle, demand levels are likely to rise again. Supply remains limited while demand continues to increase.

Already, as demand expands at high-capacity data centers, Seagate and Western Digital have notified clients of price increases. Kim Dongwon, a researcher at KB Securities, stated, "The commonality between HDDs and NAND is that there has been little investment over a long period, making it difficult to respond to rising demand, which leads to sharp price hikes," adding, "Considering the stronger-than-expected demand cycle, we recommend Samsung Electronics and SK Hynix as the top picks in the semiconductor sector."