Highest Since Its Inception
Market research firm Omdia’s latest analysis revealed that SK hynix has reached a market share of 35% in the DRAM sector for the third quarter. With the increasing importance of High Bandwidth Memory (HBM) in the AI era, a shift towards a quality-centric winner-takes-all structure in the DRAM industry is anticipated.
Senior Researcher Jung Sung-kong of Omdia, speaking at the Omdia Korea Conference 2023 held at the COEX convention center in the Gangnam district of Seoul on Nov. 23, stated, “One of the industries greatly benefiting from AI growth is DRAM,” and predicted significant changes in the DRAM industry moving forward.
Jung noted that the proportion of AI servers is increasing due to generative AI effects, with AI demand expected to continue in the medium to long term. The growing role of DRAM in AI learning also leads to a corresponding increase in demand. He highlighted the particularly noticeable growth of HBM, now a key focus for AI memory.
The annual growth rate of the DRAM market revenue is projected at 21% from this year to 2027, while the HBM market is expected to soar at 52%. HBM’s share of the DRAM market revenue is set to exceed 10% this year and approach 20% by 2027.
Jung mentioned, “Major global IT companies are queuing up for HBM.” He added, “Even though HBM manufacturers plan to more than double their capacity next year, the backlog of orders extending up to 52 weeks seems insufficient to meet the demand.”
HBM is priced 5-7 times higher than standard products, with a shorter replacement cycle of 1-2 years. SK hynix’s market share in DRAM also increased due to the HBM effect. Jung stated, “According to Omdia’s findings, SK hynix’s market share in Q3 was 35%, the highest since the company’s inception.”
The demand for HBM is expected to continue exceeding supply. Furthermore, from next year, DRAM companies may increasingly focus on premium products like HBM, relegating mainstream products to a lower priority. This shift could enhance the negotiating power of DRAM companies for mainstream product prices due to supply limitations.
The industry practice of gaining cost competitiveness by focusing on high-demand products and thus enhancing business competitiveness is also expected to change. Given that HBM is a premium product and its production yield (ratio of good products among total production) is not easily increased, ensuring quality is crucial to expand supply in the market.
Jung concluded, “Not all can enter the HBM market; in the upcoming upcycle, only a few companies with technological capabilities will dominate. This will lead to a shift where technologically advanced companies continuously monopolize profits.”