The encouraging future prospects for artificial intelligence (AI) applications as described by Nvidia CEO Jensen Huang has successfully dispelled the downturn sentiment of Taiwanese manufacturers, but the spring breeze of AI alone may not be enough to fan an overall memory market growth. Many Korean market observers indicate that memory production cuts, China smartphone market recovery,o and datacenter investment expansions at US operators are all needed to support a rebound in memory prices.
The ongoing expansion of the generative AI market is expected to boost demand for memory products. But Korea's The Dong-A Ilbo pointed out that AI alone will hardly reverse the sluggish memory market trend and that enterprises concentrating investments on AI development may squeeze investments in other application segments. Kiwoom Securities in South Korea also indicated that among limited capital expenses by enterprises, the increase in AI server investment could lead to the decrease in public cloud investment.
An analysis of the Bank of Korea was cited by Korea's Chosun Biz indicating that due to production reduction by South Korea's semiconductor manufacturers, their inventory pressure is expected to gradually ease, and the key to the recovery of South Korea's semiconductor economy in the future lies in whether demand from smartphone and datacenter sectors will pick up. .
Industry observers said the growth of the AI market is actually good news for memory makers. From the perspective of the memory industry, they continued, strong AI server shipment momentum can stoke market demand for high bandwidth memory (HBM).
Currently, Samsung Electronics and SK Hynix together command a global HBM market share of over 90%, and the latter is now the world's only supplier able to mass produce new-generation HBM3, with Nvidia as the main customer for the product. Samsung and Micron Technology are expected to launch their own HBM3 chips by the end of 2023 and in early 2024, respectively.
Moreover, Nvidia, AMD, and Google are also investing in developing tensor processing units (TPUs) for AI data centers, simultaneously driving demand for high-capacity DDR5.
Market sources said the unit price for 80GB HBM3 is around US$1,000–1,200, and that for 128GB DDR5 is about US$1,200, both several times more expensive than the existing DDR4 products.
Demand for HBM3 and DDR5 is expected to grow further, but that DDR4, now the main revenue source for DRAM makers, is still hard to get out of the predicament. As such, when the entire memory market will rebound from the bottom still needs to be observed further, the sources said.
Article translated by Willis Ke
