Abstract:
The shortage of storage semiconductors appears to be getting worse. South Korean brokerage KB Securities recently warned that storage semiconductor inventories of Samsung Electronics and SK Hynix have dropped to less than 10 days of supply, and available supply will be significantly insufficient next year. KB Securities noted in a report released on Monday that the memory chip market is facing a severe supply shortage as investment in artificial intelligence infrastructure expands at an unprecedented rate. A key factor exacerbating the supply shortage is the transition to next-generation high-bandwidth memory HBM4.
The agency noted that HBM4 requires approximately three times as many wafers as traditional DRAM. Due to limited wafer production capacity, full mass production of HBM4 will inevitably reduce the available production capacity of traditional DRAM. KB Securities predicts that DRAM and NAND demand will exceed supply by more than 10 percentage points next year as a result.
KB Securities research director Kim Dong-won also said that artificial intelligence servers will consume not only HBM memory, but also server DDR5 memory and enterprise-class solid-state drives, which may lead to historic shortages.
Fundamentals and stock price
KB Securities also pointed out that global hyperscale data center operators have raised their investment expectations for artificial intelligence infrastructure next year to US$1.3 trillion, a 60% increase from the previous year. As artificial intelligence business models mature and become a direct source of revenue, investment growth is accelerating.
The agency expects storage semiconductors to account for 57% of total investment in artificial intelligence infrastructure next year, up from 14% last year. Market research company TrendForce predicts that this proportion may be as high as 68%.
Although the memory market is in short supply, the stock prices of Samsung Electronics and SK Hynix have fallen sharply in the past period. Samsung Electronics fell by nearly 28% from its high point, and SK Hynix fell by nearly 40%. The share price declines for both companies were linked to a broad pullback in memory stocks and high leverage in South Korea's stock market.
While the decline reflects market concerns, analysts say the companies' shares are significantly undervalued relative to their fundamentals, with earnings expected to reach record highs for the third consecutive year.
KB Securities said that the current period may mark the beginning of a significant increase in valuations of the semiconductor industry, given market expectations that the large-scale shareholder return policy will continue.
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