HBM industry chain, exploded!

In 2023, with the surge in demand for AI GPUs and various AI-related applications, the price of HBM experienced an "unexpected surge". In 2024, HBM remained in high demand, driving up the stock prices of companies in the industry.

On Tuesday, SK Hynix's stock price rose by another 5%, while Samsung Electronics saw a 1.5% increase. Upstream chip equipment manufacturer Tokyo Electron's stock price skyrocketed by 13%, reaching a market value of $106 billion, setting a new record high. Japanese semiconductor equipment company TOWA also saw its stock price rise by over 4%.

AI GPU Demand Drives HBM Price to "Unexpectedly Surge" by 500%

In 2023, the surge in demand for AI GPUs and various AI-related applications led to a "surprising surge" of 500% in the average selling price (ASP) of HBM.

Let's briefly introduce HBM. HBM, short for High Bandwidth Memory, is a type of DRAM (Dynamic Random Access Memory) designed for data-intensive applications that require high throughput. HBM acts as a "transit station" for data, storing each frame and image data used, waiting for the GPU to call upon.

Currently, the AI server GPU market is dominated by NVIDIA's H100, A100, A800, and AMD's MI250, MI250X series, all of which are equipped with HBM. The cost of HBM accounts for the third-largest portion of AI server costs, approximately 9%, with a single machine ASP reaching as high as $18,000.

Market research firm Omnia predicts that HBM will account for over 18% of the DRAM market this year, surpassing last year's 9%. "Currently, there is no other storage chip that can replace HBM in the field of AI computing systems," said an industry insider.

According to data from market research firm Yole Group on February 8th, the average selling price of HBM chips this year is five times that of traditional DRAM memory chips. The firm also stated that due to the dual impact of production expansion difficulties and surging demand, the compound annual growth rate of HBM supply from 2023 to 2028 is expected to reach 45%. Considering the difficulty of expanding production, HBM prices are expected to remain high for a considerable period of time.

In 2013, SK Hynix collaborated with AMD to develop the world's first HBM. Currently, Samsung Electronics and SK Hynix dominate the HBM memory manufacturing field, with SK Hynix holding approximately 50% of the HBM market share, Samsung Electronics with 40%, and Micron with less than 10%. For a long time, SK Hynix has been the exclusive supplier of NVIDIA's HBM. In 2023, SK Hynix will have a virtual monopoly on HBM3 supply, and this year its orders for HBM3 and HBM3E have already been sold out. As the main supplier of NVIDIA's HBM, SK Hynix's stock price has soared by over 60% in the past year.

Recently, SK Hynix revealed that its next-generation HBM4 memory will begin development in 2024 and mass production will start in 2026, providing support for NVIDIA's next-generation AI GPU, Blackwell B100. Kim Wang-soo, the head of the company's GSM team, said:

"With the mass production and sales of HBM3E next year, our market dominance will be further consolidated.

With the upcoming development plan for HBM4, SK Hynix's HBM technology will enter a new stage of development, which is a milestone worth celebrating."

Industry insiders analyzed:

"We expect to see the first batch of HBM4 memory samples with a capacity of 36GB per stack, enabling the next-generation AI GPU to be equipped with up to 288GB of HBM4 memory, ushering in a new era of performance.

NVIDIA's next-generation Blackwell B100 AI GPU will adopt the latest HBM3e memory, while the next AI GPU, codenamed Vera Rubin, is expected to adopt HBM4 memory.

We can also expect that the upgraded version of the Blackwell AI GPU will use HBM4 memory in the future."

Beneficiaries in the Industry Chain

SK Hynix recently announced that the sales volume of its new generation HBM product, HBM3, has increased by more than five times year-on-year. Samsung Electronics stated that the share of advanced HBM products, including HBM3, has reached nearly 50% of the total semiconductor sales, and is expected to increase to 90% by the end of the year.

Facing the growing demand for HBM, Samsung Electronics and SK Hynix are increasing HBM production and allocating capital expenditure to HBM-related equipment, benefiting companies in the industry chain.

On February 5th, Japanese semiconductor equipment company TOWA announced that it expects to receive the "largest order" for manufacturing HBM chip machines from "major Korean manufacturers". Hirokazu Okada, President and CEO of the company, said:

"We expect to receive orders for more than 20 machines from Korean chip manufacturers in this fiscal year (ending in March)."

With the tailwind of HBM, in the past year, Donghe's stock price has soared by 326.65%, and its market value has reached a new historical high.

As mentioned earlier, Tokyo Electronics, a chip equipment manufacturer, has also benefited from this trend. The company expects investment from DRAM manufacturers to rebound this year due to the continuous rise in demand for AI. In the past year, Tokyo Electronics' stock price has risen by nearly 120%.