The AI boom is driving the recovery of memory demand, and HBM is becoming increasingly popular, reshaping the overall industry landscape.

According to the Taiwan memory supply chain, upstream memory manufacturers have already filled their HBM orders up to 2025, and orders are expected to extend into the first quarter of 2026. However, the increased demand for HBM is squeezing the DRAM production capacity, leading to gradual price increases for DDR5.
With NVIDIA's AI chips facing high demand and successfully integrating into the supply chain, SK Hynix and Micron have already sold out their HBM production for 2024 and are nearing full capacity for 2025. It is estimated that the combined monthly supply of HBM to NVIDIA will be over 60,000 chips. New construction and expansion of production capacity will be necessary in the near future.

SK Hynix has announced the establishment of the M15X production line in Cheongju as a new DRAM production base and the construction of a new plant in the Icheon semiconductor cluster.

Micron also plans to build a new DRAM plant in Hiroshima, with construction scheduled to begin in early 2026 and be completed by the end of 2027. Despite continued investment in production capacity by major DRAM manufacturers, the overall increase in capacity for 2025-2026 is expected to be limited.

The production cycle for HBM is 1.5-2 months longer than that for DDR5, and the wafer consumption is much higher than traditional DDR5 memory. For example, the wafer consumption for HBM3E is over three times that of DDR5, and with the introduction of HBM4 in 2026, consumption may reach five times that of DDR5.

Memory module manufacturers believe that while increasing production of NAND Flash must consider market supply and demand as well as industry competition, the industry is currently more cautious about increasing NAND production. However, the three major manufacturers are continuing to expand their DRAM production capacity.

Due to the significant consumption of HBM production capacity, SK Hynix and Micron have limited expansion in the past two years due to lack of capital expenditure. The monthly HBM production capacity for Micron is only about 3,000 chips, or about 1/20 of SK Hynix's supply share. In order to achieve Micron's goal of capturing about 20% of the HBM market, future capacity expansions will need to focus on HBM.

Due to the stack process and technology threshold of HBM, the yield ramp up period is more difficult than for traditional DRAM. SK Hynix has taken the lead in HBM3 mass production, maintaining its position as the market leader, while Micron only officially entered the market with HBM3E in 2024 and has a short-term yield of only about half of SK Hynix's.

Meanwhile, Samsung Electronics has yet to penetrate the HBM market due to restrictions on heat dissipation and power consumption. With the lack of experience in shipping large quantities, the yield improvement gap is expected to continue to widen.

Although Samsung has temporarily fallen behind in HBM production, it has a long-standing relationship with NVIDIA and plans to expand production capacity by three times, which will help ease NVIDIA's supply shortage. It is expected that by the end of 2024, Samsung still has a chance to catch up with NVIDIA in leading the AI market.

However, if Samsung continues to lag behind, while SK Hynix and Micron continue to expand their production capacity, it may lead to a squeezing effect, further increasing the gap in yield and capacity, and potentially delaying the market penetration rate.

As international giants compete in the HBM battlefield, the supply of standard DRAM is significantly reduced. Memory module manufacturers expect DDR5 prices to continue to rise, with an expected increase of 10-20% by the end of the year. However, the associated risk is that if DDR5 prices are too high, it may actually delay the speed of market penetration and affect downstream customer adoption rates.

Managing Editor:陳奭璁