SK Group (SK Hynix’s parent company) Chairman Cui Taiyuan also went to the Taipei International Computer Show a few days ago. In an interview with the media, Cui Taiyuan revealed that SK Hynix will double its memory wafer production capacity within 5 years. However, Cui Taiyuan also reiterated SK Hynix’s previous prediction that the artificial intelligence-driven memory market shortage will continue until 2030 before it can be alleviated.
There is no way to alleviate the memory shortage in the short term:
As far as SK Hynix's own planning timetable is concerned, Cui Taiyuan's commitment has had little effect in alleviating the tight production capacity situation. The main reason is that the construction cycle of the wafer fab is very long. Cui Taiyuan said that the cycle of building a new wafer fab exceeds 5 years. From the current time, it will indeed take until 2030 to alleviate the memory shortage, because by that time the wafer production capacity on the market has increased significantly.
However, due to the constant fluctuations in land costs, equipment costs and electricity prices, the construction cost of the wafer fab is difficult to determine, so Cui Taiyuan cannot disclose how much investment is required to build a new wafer fab. SK Hynix’s existing memory wafer production line is close to saturation, so some large customers have even offered to purchase SK Hynix’s EUV lithography machines and prepay the construction costs of the wafer production line in exchange for more memory supply. However, Cui Taiyuan did not disclose whether SK Hynix finally reached a similar agreement with customers.
The market demand for HBM series memory is too high:
The current shortage of memory supply in the entire market is caused by the rapid development of the artificial intelligence industry. The artificial intelligence industry requires massive amounts of HBM series high-bandwidth memory for training and running models. The number of wafers required for HBM series memory is much higher than that of standard DRAM. Of course, the profit margin of HBM memory is also much higher than that of standard DRAM. Therefore, suppliers throughout the industry are switching products to memories such as HBM3.
This situation has also resulted in a very limited supply of standard DRAM for ordinary consumers. The direct consequence is that the price of standard DRAM has increased at an alarming rate, which has had a negative impact on the entire industry. For example, smartphones and laptops have begun to use lower memory. If it were not for the memory shortage, the current starting memory for smartphones and laptops should have reached 16GB.
A report released by TrendForce stated that the memory contract price in 26Q1 increased by 95%, and the memory contract price in 26Q2 will increase by 63% overall. DDR4 spot prices have indeed fallen recently, but DDR4 memory prices have also increased by as much as 2,200% in 12 months. TrendForce believes that even if production capacity is doubled, the market prospects in the next five years will remain unchanged.