Samsung Electronics Co.'s 12-layer HBM3E, top and other DDR modules sorted on Thursday, April 4, 2024 in Seoul, South Korea. Samsung's profits rebounded sharply in the first quarter of 2024, reflecting the company's all-important semiconductor turnaround. Sales of the Galaxy S24 smartphone were strong.Photographer: SeongJoon Cho/Bloomberg via Getty Images
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Explosive demand for AI has created a shortage in the supply of high-performance memory chips, and the shortage is likely to continue this year, analysts say.
SK Hynix and Micron, the world's largest memory chip suppliers, are out of stock of high-bandwidth memory chips for 2024 and nearly sold out for 2025, the companies said.
”“We expect general memory supply to remain tight through 2024,” Kazunori Ito, director of equity research at Morningstar, said in a report last week.
Demand for AI chipsets has boosted the high-end memory chip market, greatly benefiting companies such as Samsung Electronics and SK Hynix, the world's top two memory chip makers. SK Hynix already supplies chips to Nvidia, but the company is also reportedly considering Samsung as a potential supplier.
High-performance memory chips play a key role in training large-scale language models (LLMs) such as OpenAI's ChatGPT, which has skyrocketed AI adoption. LLM requires these chips to remember details of past conversations with users, user preferences, and generate human-like responses to queries.
“These chips are more complex to manufacture and difficult to ramp up, which will likely continue to cause shortages through the remainder of 2024 and most of 2025,” said William Bailey, director of Nasdaq IR Intelligence. Stated.
Market intelligence firm TrendForce announced in March that the production cycle for HBM is 1.5 to 2 months longer than for DDR5 memory chips commonly used in personal computers and servers.
To meet the surge in demand, SK Hynix plans to expand production capacity by investing in an advanced packaging facility in Indiana, USA, as well as the M15X factory in Cheongju and the Yongin semiconductor cluster in South Korea.
At its first quarter results conference in April, Samsung stated that HBM bit supply in 2024 will “expand more than three times compared to the previous year.” Chip capacity refers to the number of bits of data that a memory chip can store.
“And in terms of that committed supply, we have already completed discussions with our customers. In 2025, we intend to continue to expand our supply at least more than double year-on-year, and that supply “Negotiations with customers are already progressing smoothly,” Samsung said.
Micron did not respond to CNBC's request for comment.
Big tech companies Microsoft, Amazon and Google are spending billions to train their LLMs to stay competitive, driving demand for AI chips.
“Companies like Meta and Microsoft, which are major buyers of AI chips, have indicated plans to continue pouring resources into building AI infrastructure. This means they will continue to buy AI chips in bulk, including HBM, through at least 2024. “It means that,” Chris said. Mr. Miller is the author of the book “Chip Wars” about the semiconductor industry.
Chip manufacturers are fiercely competing to produce the most advanced memory chips on the market in order to capitalize on the AI boom.
At a press conference earlier this month, SK Hynix announced that it would begin mass production of its latest generation HBM chip, the 12-layer HBM3E, in the third quarter, and Samsung Electronics also said it plans to begin mass production within the second quarter. . We were the first in the industry to ship samples of our latest chip.
SK Kim, executive director and analyst at Daiwa Securities, said, “Currently, Samsung is ahead in the 12-layer HBM3E sampling process. If it can qualify earlier than its peers, it will be able to reach the majority by the end of 2024 to 2025. We will be able to acquire shares,” he said.
