Heavyweight! HBM Customization Storm is Coming, "One Price for One Product" Becomes a New Trend?

At the just-concluded Micron Technology exchange meeting, Micron revealed a major news: in the context of insufficient HBM capacity, the industry is increasingly inclined towards customized HBM products, mainly due to the increasingly personalized demands of downstream customers.

Similarly, last month, SK Hynix also mentioned in its blog that it will launch more specialized and customized HBM4 products in 2026.

Customized HBM products can better meet customers' personalized needs for storage size and storage performance.

UBS pointed out the impact of customized HBM on the industry chain in a report on May 6:

• HBM manufacturers gain more bargaining power: "Customization" deepens the cooperation between customers and storage manufacturers, making customers less likely to change or add new suppliers after determining a supplier.

• Change in HBM pricing model: Shift from industry pricing to "one price for one product."

I. Why does HBM need customization?

In order to address the differentiated needs of customers in terms of performance, functionality, size, form, and efficiency, the market will be more inclined to create specialized and customized HBM products.

In the past traditional computer era, storage requirements were low.

With the advent of the AI computing era, the amount of data to be stored has surged, and memory needs to be large in capacity, fast in speed, low in power consumption, and small in size - thus, HBM came into being.

However, the current HBM is still in its early stages of development, due to:

• Processor + memory co-development: Co-development by processor manufacturers and storage manufacturers encourages storage products to fit the needs of customers' processors;

• Demand for product size: Different products have different requirements for storage devices;

• Customized demand for large models: Optimizing storage products for each specific model;

This will gradually lead HBM towards customization, which may ultimately prompt customers to purchase products from 1-2 suppliers, rather than historically sourcing from multiple suppliers.

II. The impact of customization on supply and demand relationships

The demand for specialization and customization maintains a tight supply and demand relationship for HBM.

Due to the aggressive expansion of the three storage giants, there was once concern in the market about an oversupply of HBM: if downstream demand for HBM slows down, will the upstream aggressive expansion lead to an oversupply of HBM.

For this reason, Morgan Stanley made calculations in its January report. From the data in the chart, it can be seen that HBM needs to maintain a certain demand growth rate to ensure that the expanded capacity is absorbed However, this concern has changed somewhat after HBM4 moved towards customization.

Due to the highly coupled nature of customized storage products with customer needs, future storage manufacturers and customers will have a deeper binding relationship. This change can increase the certainty of downstream supply of HBM, making storage manufacturers more planned in capacity planning.

III. Changes in Storage Product Pricing due to Customized HBM

Customized HBM products will shift from industry pricing to "one price for one product," meaning there is a greater possibility of structural supply-demand imbalance in the HBM storage market.

Traditional storage products are often priced according to industry-wide uniform prices due to product homogenization and numerous suppliers (see the figure below).

Upon entering the HBM era, HBM products also had corresponding industry pricing.

However, this industry pricing method will change with the introduction of HBM4.

After the transition to customization with HBM4, pricing will gradually become more personalized based on the difficulty of chip production, achieving "one price for one product."

IV. Changes in Market Competitive Landscape

Storage manufacturers that obtain more customer certifications will benefit.

"Customization" has led storage manufacturers and customers to establish deeper cooperation, giving storage manufacturers more bargaining power.

Looking at the current competitive landscape of the HBM market, Micron has taken the lead, being the first to obtain certifications from NVDA and AMD, capturing nearly 53% of the HBM market share in 2023. Goldman Sachs predicts that Micron will maintain this share for at least the next few years. Micron has currently obtained certification from NVDA and started supplying, while AMD is still in the validation stage. Samsung, on the other hand, temporarily does not have any HBM-related supply due to product yield issues.

Furthermore, from a technical perspective, Micron has always been the absolute leader in the HBM field (see the figure below: Process Development of Storage Manufacturers' HBM) However, as a domestic US company, Micron has certain geographical advantages.

Overall, with HBM4 entering specialization and customization, it further binds the cooperation between downstream customers and storage manufacturers, transforming the pricing method of HBM. Whether there will be new surprises in the future, it is worth paying attention to