The competition in the HBM market is intensifying with an increasing number of participants.
The AI boom is driving the demand for computing power, and powerful processors require higher bandwidth memory. HBM has ushered in a new wave of business opportunities for memory chip manufacturers, with SK Hynix, Samsung, and Micron emerging as the three major suppliers of HBM. How important is HBM technology in the AI era? What is the market size?
Is HBM a golden path or a thorny road?
HBM (High Bandwidth Memory) is a type of memory that can be used for high-speed computing and can transport a large amount of data. It utilizes 3D stacking packaging technology, stacking multiple DRAM chips vertically and connecting them with silicon through-silicon vias (TSV). This not only increases the memory bandwidth but also reduces issues related to power consumption and volume space. HBM can access memory at faster speeds, allowing for easy transmission and storage of data, and is specifically tailored for high-performance computing applications, suitable for AI servers, the autonomous driving market, high-performance computing, and high-speed network equipment.
TrendForce estimates that the annual growth rate of HBM demand will be nearly 200% in 2024, and it is expected to double again in 2025. Research firm Mordor Intelligence predicts that the global market size of HBM will reach $2.52 billion in 2024, growing at a compound annual growth rate of over 25%, and will reach nearly $8 billion by 2029. Goldman Sachs is optimistic that the market size of HBM will reach $30 billion by 2026 and reiterates the view that HBM will be in short supply in the next few years. Yole Group predicts that the market size of HBM will be about $14.1 billion in 2024, slightly close to $19.9 billion in 2025, and will develop into $37.7 billion by 2027.
Even though the market size has great potential, it does not mean that the development can proceed smoothly. Currently, HBM still faces various challenges in terms of cost and yield. The thickness of HBM is influenced by more advanced DRAM processes because it needs to be made by stacking DRAM. The accuracy of stacking and heat dissipation are also key to the success or failure of HBM. The stacking structure also adds a lot of difficulty to the packaging and testing of HBM, leading to increased production costs.TrendForce mentioned that the current yield rate of HBM is between 50-60%. Even though the industry has tried to improve the cost-effectiveness of HBM through optimized designs, material improvements, process upgrades, and other methods, it is still unknown when HBM will reach cost parity with other memory types.
Major Korean and American companies are competing in the HBM market. In 2024, the HBM market is almost monopolized by three major companies. Among them, SK Hynix has about 52% market share, Samsung accounts for 42.4%, and Micron has about 5%. Looking at the mainstream product HBM3, SK Hynix's share in the HBM3 market exceeds 90%, with Samsung and Micron following closely behind. According to CNBC's report citing SK Hynix and Micron, their HBM for 2024 has already been sold out, and even the 2025 HBM production capacity is almost fully booked.
Looking forward to 2025, market demand will shift significantly towards HBM3E, and the emergence of more 12hi products will increase the capacity of HBM per chip. The three major memory manufacturers are actively expanding their HBM production capacity. The market estimates that the new wafer input in 2025 will be about 276,000, and the total production capacity will increase to 540,000, with a year-on-year increase of 105%. To cope with the vast market, the three memory giants are also actively investing more resources in R&D.
Currently, SK Hynix, the leader in the HBM market, will invest 20 trillion won (about 14.5 billion US dollars) to build a factory in Cheongju, South Korea, and cooperate with TSMC to produce the next generation of HBM4 or the sixth generation of HBM series chips, with mass production planned to start from 2026.
Kwi Wook Kim, the head of SK Hynix's HBM technology team, said in May that the update cycle of the new generation of HBM has been shortened from 2 years to 1 year, and the mass production time of the seventh generation of HBM will be advanced to 2026. In addition, SK Hynix also announced plans to invest 103 trillion won (75 billion US dollars) in the next four years before 2028, with 80% of it used for HBM R&D and production.
Samsung's HBM news is constantly emerging, including failing to pass NVIDIA's test for AI processors or passing NVIDIA's quality verification, etc. Although all of these have been denied by NVIDIA and Samsung, Samsung's stock price still fluctuates, attracting market attention.
According to South Korean media reports, Samsung recently established a new department dedicated to the development of HBM, focusing on the R&D of the next generation of HBM4, HBM3, and HBM3E products, hoping to regain a leading position in the market. Samsung has clearly revealed the R&D schedule for HBM4 technology, planning to make its debut in 2025. However, the effectiveness of this reform is still to be observed, especially as Samsung is facing its first strike in history. The union has said that if their demands are not met, the next strike target will be the HBM production line in Pyeongtaek, which may affect Samsung's HBM production line. To make matters worse, its competitor SK Hynix is actively recruiting new positions related to HBM, which may put Samsung in an embarrassing situation of being poached.
Micron took the lead in mass-producing the latest HBM3E chip in February this year and successfully won the order for NVIDIA's H200 AI GPU. After receiving semiconductor subsidies from the Japanese government, Micron announced that it will invest 600 billion to 800 billion yen (about 3.8 billion to 5.1 billion US dollars) in Hiroshima Prefecture, Japan, to build an advanced DRAM chip factory using extreme ultraviolet lithography equipment (EUV). The construction is expected to start at the beginning of 2026 and begin operations at the end of 2027.Japanese media reports indicate that Micron aims to significantly increase its High Bandwidth Memory (HBM) market share to more than three times the current level by the end of 2025, approaching around 25%. Informed sources reveal that to boost HBM production, Micron is building multiple test production lines in the United States and is considering manufacturing HBM in Malaysia for the first time, while also expanding production capacity in Taiwan.
China Strives for Chip Autonomy
In order to break through the U.S. blockade and achieve chip autonomy, the market previously buzzed with rumors that major Chinese smartphone manufacturers were joining hands with several semiconductor companies to make a push in the HBM field.
From the layout of Chinese official and private enterprises, it can be seen that China is increasingly valuing HBM chip technology. The "Big Fund Phase III" plan, organized by the government, invests up to 344 billion yuan, mainly for the development of the semiconductor industry, and the HBM industry chain may be one of the key investment focuses.
China is still in the early stages of HBM research and development. Although there are more advanced HBM3 and HBM3E internationally, China's current focus is still on the research and development and manufacturing stage of HBM2. In addition, although the United States has not restricted the export of HBM chips, HBM3 chips are manufactured using American technology, which Chinese companies cannot obtain.
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