SK Hynix's market share in the DRAM field reached 35% in the third quarter. As high-bandwidth memory (HBM) gains increasing importance in the era of artificial intelligence, the DRAM industry is expected to shift to a quality-centric winner-take-all structure.
"One of the industries that will benefit greatly from the growth of AI is DRAM," Omdia researcher Jung Sung-kong said during a speech at the 2023 Omdia Korea Conference on November 23 at the COEX Convention Center in Gangnam-gu, Seoul. Significant changes are predicted for the DRAM industry in the future.
Jung pointed out that the proportion of AI servers is increasing due to the generative AI effect, and it is expected that medium- to long-term AI demand will continue. The increasing role of DRAM in AI learning has also led to a corresponding increase in demand. He highlighted particularly significant growth in HBM, which is now a focus for AI memory.
DRAM market revenue is expected to grow at an annual rate of 21% from this year to 2027, while the HBM market is expected to soar 52%. HBM's share of DRAM market revenue is expected to exceed 10% this year and approach 20% by 2027.
Jung mentioned that “major IT companies around the world are lining up to buy HBM.” He added, “Although HBM manufacturers plan to more than double production capacity next year, the 52-week backlog of orders does not seem to be enough to meet demand.”
The price of HBM is 5-7 times higher than standard products, and the replacement cycle is 1-2 years shorter. SK Hynix's market share in the DRAM field has also increased due to the HBM effect. Jung said: "According to Omdia's survey results, SK hynix's market share in the third quarter was 35%, which is the level since the company was founded."
Demand for HBM is expected to continue to exceed supply. Additionally, starting next year, DRAM companies may increasingly focus on high-end products such as HBM, placing mainstream products at a lower priority. The shift could enhance DRAM companies' negotiating power over mainstream product prices due to supply constraints.
Industry practices that enhance business competitiveness by focusing on high-demand products to achieve cost competitiveness are also expected to change. Since HBM is a high-quality product, its output (the proportion of good products to total output) is not easy to increase, so ensuring quality is crucial to expanding market supply.
Jung concluded: "Not everyone can enter the HBM market; in the coming upgrade cycle, only a few technically capable companies will be able to dominate. This will lead to a shift towards technologically advanced companies continuing to monopolize profits."
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