Will HBM be in surplus next year? Where is the DRAM downturn cycle heading? Goldman Sachs elaborates on the core issues of chip technology

As a key storage technology for high-performance computing and AI applications, HBM has seen a significant increase in demand in recent years. Investors have started to worry that there may be an oversupply of HBM by 2025, exacerbating the risks of the cyclical downturn in DRAM.

In response to these concerns, Goldman Sachs stated in its latest research report released on the 16th that these worries may be premature. The report emphasizes that major global cloud computing companies are still increasing their investments in storage devices, making it unlikely for an oversupply situation to occur. Additionally, the development of advanced packaging technologies (such as CoWoS) and the expectations of major customers for tight HBM supply will drive the demand for HBM.

At the same time, suppliers' inventories are relatively healthy, and the DRAM market is expected to undergo a mid-cycle inventory adjustment in the coming quarters.

HBM Market in High Demand, Controversy over DRAM Cycle

Investors' focus continues to be on the HBM market, with growing concerns that oversupply may start as early as next year.

Goldman Sachs stated that this situation is unlikely to happen, mainly because large-scale enterprises are continuing to spend in the global cloud computing sector, and CoWoS capacity is growing strongly.

The report also points out that major HBM suppliers are facing challenges in improving production yields, meaning that it will be difficult to rapidly increase supply in the short term.

Therefore, Goldman Sachs believes that HBM will be in high demand next year, especially with SK Hynix's leading position in the AI memory market, maintaining a tight supply-demand balance until 2025, and remaining the preferred choice for investors.

Compared to the HBM market, the outlook for the DRAM market appears more complex. Some investors believe that with rising inventory levels and increased supply from other countries, DRAM may enter a longer downward cycle.

However, Goldman Sachs holds a cautiously optimistic view on this. Despite high customer inventory levels, supplier inventories are relatively healthy, and the market is expected to undergo a mid-cycle inventory adjustment in the next few quarters.

Furthermore, the strong demand for HBM may have a positive impact on the DRAM market. Therefore, while market fluctuations are inevitable in the short term, Goldman Sachs believes that the DRAM market will not experience a significant downturn.

Samsung Electronics: Undervaluation Attracts Investors

As one of the giants in the global memory chip industry, Samsung Electronics' stock performance has been widely watched in recent years.

The report points out that although Samsung Electronics' stock price has recently declined, its current valuation is approaching historical lows of a P/E ratio of 1, attracting the interest of many investors.

Most investors believe that there is limited downside to Samsung Electronics' stock price, however, there is a lack of clear catalysts for a significant stock price increase in the short term.

Investors are particularly focused on Samsung Electronics' upcoming third-quarter earnings report, hoping for more signals about the future market direction.

SK Hynix: Strong Performance in the HBM Market

Compared to Samsung Electronics, SK Hynix's performance is more favored by investors. The report highlights that SK Hynix continues to attract positive attention from investors due to its leading position in the HBM market Most investors believe that the HBM market will remain in a supply shortage situation until 2025, which brings strong growth expectations for SK Hynix.

The report also mentioned that SK Hynix's future growth potential will also come from the planned construction of the M15X wafer fab, which is expected to be completed next year, further enhancing its production capacity for HBM