Hyper Track | SK Hynix Eats "Big Meat": Samsung Micron Rise

Author: Zhou Yuan / Wall Street News

Despite NVIDIA's stock price plummeting after hitting a new high in market value and failing to return to its peak, the AI-driven trend has allowed NVIDIA to "make a fortune" in the past 18 months. As the supplier of HBM, the core component of NVIDIA's AI accelerator card (GPU), SK Hynix has also "had a big piece of the pie"; while Samsung Electronics, the "archenemy" of Hynix, has had a series of twists and turns in supplying HBM (3E) to NVIDIA, with no success so far.

On July 4th, some media reported that Samsung Electronics' HBM3E had passed NVIDIA's tests. Subsequently, Samsung Electronics denied this news.

SK Hynix is the world's second-largest memory chip manufacturer after Samsung Electronics. However, SK Hynix is also a major supplier of HBM to NVIDIA, with a market share exceeding Samsung Electronics and Micron Technology.

During the earnings conference in April this year, SK Hynix stated that, driven by AI demand, its revenue growth rate reached the fastest since 2010, and it is expected that the memory market will fully recover.

The financial report shows that SK Hynix's sales in the first quarter of this year increased by 144% year-on-year, reaching 12.4 trillion Korean won (approximately 9 billion U.S. dollars), far exceeding expectations; operating profit was 2.89 trillion Korean won (approximately 21 billion U.S. dollars), while in the same period in 2023, it had a loss of 2.6 trillion Korean won (approximately 19 billion U.S. dollars), far exceeding the market's previous expectation of 1.8 trillion Korean won (approximately 13 billion U.S. dollars).

This is the second-highest first-quarter operating profit in the company's history. The key reason SK Hynix was able to "make a fortune" in the first quarter was its strategic move to supply HBM to NVIDIA ahead of others.

According to a report by market research firm TrendForce, in 2023, SK Hynix led the HBM market with a 53% market share, followed by Samsung Electronics (38%) and Micron (9%).

Park Myeong-Jae, the design director of SK Hynix's HBM DRAM, stated in a recent blog post, "SK Hynix is widely recognized as the undisputed leader in the HBM market."

Park Myeong-Jae wrote, "In 2009, SK Hynix began developing HBM, anticipating a continuous increase in demand for this high-performance memory chip. SK Hynix spent four years on continuous development, focusing on Through Silicon Via (TSV) technology. By December 2013, Hynix launched its first HBM product."

In 2013, SK Hynix developed the first generation of HBM, becoming the world's first memory supplier with HBM technology and mass production capabilities; in the following years, Hynix introduced subsequent products - HBM2 (second generation), HBM2E (third generation), and the latest fourth generation HBM3.

In April 2023, Hynix developed the world's first 12-layer HBM3 DRAM product with a memory capacity of 24GB, the largest in the industry; in August of the same year, it launched the industry's best-performing fifth-generation HBM DRAM - HBM3E, designed for AI applications, and provided samples to NVIDIA for performance evaluation The product that helped SK Hynix take the top spot in HBM market share from Samsung Electronics is HBM3. Due to its overwhelming performance and characteristics, SK Hynix has surpassed Samsung Electronics in the HBM market, becoming the global No.1 in market share.

SK Hynix is the first company to pass NVIDIA's certification tests and become a major supplier. Industry estimates suggest that Hynix's HBM3E yield is already stable.

Currently, SK Hynix supplies various types of HBM memory to companies such as Amazon, AMD, Facebook, Google (Broadcom), Intel, Microsoft, and NVIDIA. Due to the excellent performance of the company's HBM, demand exceeds supply, with orders backlogged until 2025.

Kim Woohyun, CFO of SK Hynix, said, "With our leading AI memory technology driven by our HBM, we have entered a clear recovery phase in the industry."

To maintain its leading position in technology and market share in the HBM field, SK Hynix announced in a statement on June 30th that it will invest approximately 82 trillion Korean won (about 592 billion US dollars) in high-bandwidth memory (HBM) chips.

SK Hynix has made specific optimizations for NVIDIA's AI accelerators with HBM. As part of its AI strategy, SK Telecom and SK Broadband will invest 3.4 trillion Korean won (approximately 25 billion US dollars) in their data center business.

In March of this year, SK Hynix began mass production of HBM3E DRAM; at the same time, Hynix announced that the mass production time for HBM4 (the sixth generation) will be brought forward from 2026 to 2025. This is because NVIDIA is accelerating the pace of new product iterations.

Of course, faced with such huge profits, SK Hynix's other two competitors, Samsung Electronics and Micron Technology, are also eyeing the situation: Samsung Electronics established three HBM technology and product special teams within three months in the first half of this year, and in May replaced its semiconductor leader with Jun Young-hyun to "regain" lost market share in the HBM market.

However, Samsung Electronics' efforts have not yet shown market results; compared to Micron Technology's bold claim - expecting to occupy over 20% of the HBM market by 2025, doubling its current 9% market share - this goal has not been achieved yet, but the effect is still there.

Where does Micron Technology's confidence come from?

As the last of the HBM top three, Micron Technology has adopted an aggressive technical strategy: skipping HBM3 and directly developing and mass-producing HBM3E. This extremely bold strategy has paid off, as Micron Technology secured NVIDIA and increased the supply of HBM3E to NVIDIA by the end of 2023 Micron President and CEO Sanjay Mehrotra stated at a recent earnings conference, "Strong AI demand and robust execution drove Micron's third-quarter revenue to grow by 17% quarter-on-quarter, exceeding our expectations. Micron's market share of high-margin products like HBM continues to expand."

Micron Technology generated approximately $100 million in sales from HBM3E shipments. Micron expects that in the remaining quarter of the 2024 fiscal year (2024.6-2024.8) and the 2025 fiscal year (2024.9-2025.8), HBM will bring in billions of dollars in revenue for Micron Technology.

Earlier reports indicated that Micron Technology's HBM supply for 2024 and 2025 has been sold out, with pricing for most of 2024 and 2025 already determined. Micron's HBM3E 12-layer stack product is currently in the sampling phase, and Micron anticipates that this product will enter mass production in 2025