Samsung Electronics is gradually reducing the production of legacy semiconductors, such as DDR4, in the face of China's low-cost volume offensive, and it seems that the third-generation high bandwidth memory (HBM2E) business will also be scaled down compared to previous levels. With companies like CXMT expected to enter the HBM2E market in earnest, this move is interpreted as a strategy to focus on the fifth-generation HBM (HBM3E) and sixth-generation HBM (HBM4) markets.
According to the industry on the 25th, Samsung Electronics is reducing its HBM2E production volume. Samsung Electronics aims to expand production in order to pass NVIDIA's HBM3E quality tests. Additionally, resources, including personnel, are reportedly being concentrated to gain a competitive edge in the HBM4 market. The Chinese Economic Daily reported, "Samsung Electronics' HBM2E business has entered the 'final sales' phase."
As Chinese corporations make strides in the legacy memory market, Samsung Electronics appears to be looking to scale back related businesses. Companies like CXMT have been flooding the market with DDR4 and other products at low prices, accelerating the price decline. For this reason, Samsung Electronics and SK hynix are experiencing difficulties in defending their revenue and are significantly reducing production.
Currently, global memory semiconductor corporations like Samsung Electronics, SK hynix, and Micron are focusing on HBM3E as their main product in the HBM market. SK hynix is supplying 8-layer and 12-layer HBM3E to NVIDIA. SK hynix stated in a conference call on the 24th that the revenue share from HBM3E 12-layer sales is expected to surpass that of the 8-layer in the second quarter of this year. Micron has passed NVIDIA's quality tests and is expanding its production capacity for HBM3E 8-layer. Samsung Electronics is currently conducting quality tests aiming for passage this second half, with the expectation that the HBM4 market will fully blossom next year, prompting all three companies to prepare for the development and mass production of HBM4.
Samsung Electronics is expected to reduce the scale of its HBM2E business and focus on strengthening its competitiveness in the high-value HBM markets of HBM3E and HBM4. Recently, Samsung Electronics has transferred personnel from its foundry (semiconductor contract manufacturing) division to develop and mass-produce next-generation HBM. The 'logic die,' which serves as the brain of HBM4, is also proactively being mass-produced through foundry processes, with plans to develop HBM4 products and deliver them to clients immediately after the production of 10-nanometer-class 6th generation (1c) DRAM incorporated in HBM4.
Samsung Electronics urgently needs to pass the quality tests of its main customer, NVIDIA, for the HBM market. Unlike general DRAM and NAND flash, HBM typically confirms supply quantities a year in advance. If quality tests for HBM3E and HBM4 are delayed, competitors will secure supply quantities ahead of time, making disruptions in next year's business inevitable. SK hynix, which holds the first position in HBM market share, is reportedly planning to finalize supply quantities for next year's HBM3E 12-layer and HBM4 as early as the first half of this year.
An industry official noted, "If SK hynix finalizes supply quantities with NVIDIA and others in the first half of this year, even if Samsung Electronics develops HBM3E and HBM4, it will be difficult to narrow the gap with SK hynix in next year's market," adding that "a swift market response is necessary."