Source: Hard AI Author: Zhang Yifan

As a key component of high-performance computing, HBM has received attention from the market. Manufacturers such as Hynix, Micron, and Samsung are increasing their layout and continuously launching new products to seize market share.

However, due to the aggressive expansion of HBM production capacity by storage vendors such as Samsung and Hynix, the market is concerned about an oversupply of HBM, and it is expected that HBM ASP (average price of HBM) will decline in 2025.

Recently, at its performance conference, Nvidia revealed that 2024 hashrate card shipments exceeded expectations. Additionally, at its earnings conference, AMD raised its 2024 data center GPU revenue forecast from $3.5 billion to $4 billion.

Analysts predict that due to significant downstream demand, the supply of HBM3E with GPUs will continue to be tight until 2025, easing market concerns about potential oversupply in the HBM market.

Goldman Sachs pointed out that from 2023 to 2026, the HBM market will grow at a compound annual growth rate (CAGR) of close to 100% to reach US$30 billion by 2026.

I. Market share forecast for the big three storage companies

Goldman Sachs expects SK Hynix to remain HBM's main supplier in the next few years, and its market share will remain above 50%.

In the past, memory processes and process requirements were low, and there were many vendors that could provide them.

As computing requirements continue to increase, memory is also constantly being iterated, along with upgrades in transmission rate, bandwidth, and storage capacity.

The memory process also moved from the initial 0.18 µm traditional process to HBM's 10 nm advanced process.

This advanced process involves high-end process technologies such as CoWoS and TSV, and the process requirements for storage vendors are very strict.

Currently, only three storage vendors in the world, Hynix, Micron, and Samsung can provide the HBM storage required for AI computation.

1) Recent developments at HBM

HBM storage has been iterated to HBM3E.

Both Micron and Hynix have previously announced that sample deliveries have been verified by NVDA and have begun supplying HBM3E to NVDA.

On the other hand, Samsung, which has the largest market share in HBM2 technology, has never been able to pass Nvidia's verification due to multiple sample deliveries due to poor yield, and has not supplied Nvidia to date. As a result, the market lowered Samsung's HBM shipping expectations for this year.

Originally, the market expected the performance of Samsung and Hynix to be evenly matched in the HBM market. After Samsung's expectations were lowered, Goldman Sachs thought:

• SK Hynix: will be the leading supplier of HBM3 and HBM3E, and will maintain a market share of more than 50% over the next 2-3 years;

• Samsung Electronics: Due to certification difficulties, it is predicted that its HBM market share will drop to 35% this year;

• Micron: Micron is expected to achieve significant growth in the HBM business and reach 11% market share by 2026, compared to the current share of only 5% of Micron.

Notably, Goldman Sachs's expectations for significant growth in Micron depend on Micron's future strategic expansion in the HBM sector. However, Micron indicated at the latest exchange meeting that the company has no intention of drastically expanding HBM's production capacity yet.

2. HBM ASP maintains an upward trend

As demand for HBM3E continues to rise and supply continues to be tight, analysts have revised their previous forecast for a decline in HBM ASP (HBM Average Selling Price) and now anticipates year-over-year growth in 2024 and 2025.

1) Increased market share of HBM3E

Goldman Sachs notes that in 2024/2025, the overall market share of HBM3E in the HBM market is expected to increase from 35%/49% previously anticipated to 41%/52% as the high-end HBM3E market share continues to increase and supply restrictions (see chart below).

Furthermore, due to the continued imbalance between supply and demand, the price of HBM3E is also expected to be 10-20% higher than HBM3. Goldman Sachs expects this price premium to continue until at least 2025.

2) HBM supplier capacity sold out

From a supply chain perspective, major HBM suppliers Hynix and Micron both said their 2024 and 2025 HBM production capacity has been fully booked. This further exacerbated the tight supply situation and mitigated market concerns about potential oversupply in the HBM market.

Analysts believe that in the next few years, even if HBM production capacity and yield increase slightly, the higher HBM content per GPU will continue to exceed supply in the future.

Goldman Sachs's latest forecasts for 2024, 2025, and 2026 show HBM supply gaps of 2.7%, 1.9%, and 0.9%, respectively. This indicates that compared to their previous forecast (supply shortages of 2.0%, 1.0%, and 0.7%, respectively), the gap between supply and demand is more tight.

Overall, the higher memory capacity of each GPU in the future has further contributed to the increase in HBM TAM (HBM Potential Market) valuation.

edit/lambor