SK Hynix announced its third-quarter performance today in the Science and Technology Innovation Board Daily. It achieved a revenue of 17.57 trillion Korean won (market expectations 18.16 trillion Korean won), reaching a historical high. It also achieved an operating profit of 7.03 trillion Korean won (market expectations 6.91 trillion Korean won), and a net profit of 5.75 trillion Korean won (market expectations 5.22 trillion Korean won).

Of note, this year, AI server memory demand, led by HBM, has shown significant growth, becoming an important component supporting SK Hynix's impressive financial results. The HBM sales have increased by over 70% quarter-on-quarter and over 330% year-on-year. SK Hynix emphasizes that driven by data center customers, the AI memory demand remains strong. By expanding sales of high-end products like HBM and eSSD, the company has achieved its highest revenue since its establishment.

Bank of America believes that SK Hynix's HBM business is rapidly expanding. Based on the premise that both sales volume and prices will increase, it is expected that SK Hynix's HBM sales will grow from $2.3 billion in 2023 to $9.2 billion and $15.8 billion in 2024 and 2025.

SK Hynix stated in its financial report that the trend of AI server memory demand growth will continue next year as generative AI evolves into multimodal forms. This drives global tech giants to invest further in developing Artificial General Intelligence (AGI). The demand for HBM is expected to exceed expectations next year, and it is anticipated that HBM demand will continue to outstrip supply.

With the increasing demand for artificial intelligence and the high-profit attributes of AI memory products like HBM, suppliers are urged to enhance their corresponding production capacity and technological capabilities.

According to recent reports by ZDNet Korea, SK Hynix is reducing the scale of its CIS and wafer foundry business to below half of the capacity level in 2023. It is reallocating employees from the System on Chip (SoC) design department to the HBM business. Just last month, the company announced the start of mass production of the world's first 12-layer HBM3E product with a capacity of 36GB, the highest capacity of existing HBMs.

Besides SK Hynix, Samsung is reportedly considering sending researchers directly to its HBM manufacturing plant to strengthen communication and collaboration with the on-site production teams. Micron's performance guidance anticipates capital expenditures of $3.5 billion in the first quarter of 2025, with the majority allocated to building new wafer fabs and HBM expenses.

The HBM industry chain is expected to benefit.

Among all storage chips, HBM has always been seen as the most suitable product for AI training and inference. With the global AI boom and strong promotion by suppliers, HBM has already taken the market by storm. At the same time, upstream equipment and materials supplies are also expected to benefit.

On the upstream equipment side, HTSC's research report pointed out that DDR5 and HBM are driving memory demand, while logic customers continue to digest additional capacity. Bullish on the global semiconductor equipment industry's recovery. Among publicly listed companies, Secote provides HBM-related testing equipment for Samsung; Advanced Micro-Fabrication Equipment Inc. China supplies TSV equipment capable of etching holes ranging from below 1 micron to several hundred microns in diameter.

On the material side, Citic Sec's research report points out that with the strong growth of the global semiconductor manufacturing industry, it is expected to drive the growth in demand for semiconductor materials. It is recommended to focus on new materials related to AI investment themes such as computing power, storage, and advanced packaging. In terms of materials, HBM's uniqueness lies in stacking and interconnection, which can be divided into manufacturing materials and packaging materials.

In terms of manufacturing materials, the precursor is an essential material for HBM manufacturing. Regarding packaging materials, Guotai Junan International's research report on October 7th stated that there are many categories of advanced packaging materials, and the market space for a single category is relatively small, with domestic manufacturers laying out in various segmented areas.

From an investment perspective, the above institutions are optimistic about the incremental segments of 'plating + lithography' due to trends such as increased TSV density and narrowing pitch spacing. The value growth of electroplating solutions and lithography materials for advanced packaging is significant, and is expected to benefit from the expansion of domestic advanced packaging plants. Recommended to focus on: Shanghai Sinyang (electroplating solutions), Aisen (electroplating solutions, lithography materials for advanced packaging), Anji Microelectronics Technology (CMP polishing solutions, electroplating solutions), etc.