The AI market continues to gain momentum, driving memory demand to rise. High-performance HBM and large-capacity flash memory products are highly favored. Recently, Samsung, SK Hynix, Micron, and Kioxia have disclosed the latest developments in multiple projects. Meanwhile, traditional memory products are reporting production cuts. The global economic outlook remains uncertain, and consumer electronics demand has yet to show clear signs of recovery, presenting ongoing challenges for the memory industry.
I. Traditional NAND and DDR4 storage products may face production cuts.
The storage market has seen mixed results recently. According to reports from foreign media and storage manufacturers, due to the slower-than-expected recovery in the consumer electronics market, companies like Samsung, SK Hynix, and Kioxia are planning production cuts to adapt to changes. Specifically, Samsung and Kioxia plan to begin phased reductions in NAND production starting in 2025 based on market conditions. SK Hynix is gradually reducing the production of traditional DDR4 DRAM, reallocating limited capacity to AI memory and advanced DRAM products.
Samsung recently released its Q3 financial report, revealing underwhelming performance. Samsung’s management issued a rare apology for the business challenges faced. The company achieved revenue of 79.1 trillion won, a 17.2% year-on-year increase, and operating profit of 9.18 trillion won, a 274.5% year-on-year increase but a 12.8% quarter-on-quarter decline, falling significantly short of the London Stock Exchange’s estimate of 11.456 trillion won in operating profit.
Samsung also announced plans to reduce production of traditional DRAM and NAND flash memory during its latest earnings call. Samsung DS Division Vice President Kim Jae-joon stated that the company is scaling down general DRAM and NAND production to align with declining market demand. Industry sources revealed that Samsung plans to reduce DDR4 capacity, reallocating it to produce DDR5, LPDDR5, and HBM advanced products.
Regarding rumors of NAND production cuts in Q4 this year, Samsung stated it has no plans to reduce production in Q4 but will adjust flexibly based on market conditions. Reportedly, Samsung Electronics has begun selling old equipment from its Xi’an NAND flash memory plant, a process expected to be completed by 2025. Most of this equipment pertains to 100-layer 3D NAND. Since last year, Samsung has been upgrading the Xi’an plant from 100-layer 3D NAND to 200-layer technology.
Kioxia’s latest supply chain news indicates that to meet the demand surge from generative AI, Kioxia plans to start mass production of eighth-generation NAND devices in 2025 and is preparing to launch the most advanced storage products. Concerned about future inventory increases, Kioxia plans to reduce NAND production in Q4 to avoid overcapacity. However, Kioxia has not commented on these rumors.
SK Hynix, according to industry sources earlier this month, plans to reduce DDR4 DRAM chip production capacity. SK Hynix’s DDR4 production share dropped from 40% in Q2 to 30% in Q3 and is expected to fall further to 20% in Q4. The company is reallocating limited capacity to AI memory and advanced DRAM products. SK Hynix has not commented on this news.
In terms of market dynamics, server DRAM demand remains stable and is growing. With the expansion of cloud computing and data centers, major CSPs like AWS, Meta, Azure, Google, Baidu, HPE, Dell, and Alibaba Cloud continue to invest, driving the adoption of DDR5 chips and memory modules. Meanwhile, due to declining personal computer demand, PC DRAM chip sales have stagnated.
For NAND, industry reports show that after utilization rates of major NAND production lines dropped to 50% in 2023, they recovered to 80%-90% by mid-2024. However, spot prices in Q3 and Q4 of this year have weakened, leading to a gradual decline in utilization rates. Aside from large-capacity NAND technologies, demand for general NAND products remains low, prompting companies to further adjust utilization rates. Many storage manufacturers are now focusing on high-value-added storage products like HBM, DDR5, LPDDR5, CXL, or enterprise SSDs (eSSDs).
II. New NAND/DRAM production lines for the storage market.
Recently, Samsung, SK Hynix, Micron, and Kioxia have disclosed multiple expansion or construction plans, all focusing on high-value-added storage products such as HBM, CXL, or eSSDs. The latest technological advancements in the market have drawn significant attention. Amid the current hot and cold trends in the storage market, manufacturers are increasingly refining their investments, focusing on advanced cutting-edge technologies and high-value products as the main direction.
1. Samsung to expand its semiconductor packaging plants in Suzhou, China, and South Korea with HBM production lines.
For DRAM expansion, recent media reports indicate that Samsung decided in Q3 to adjust the capacity allocation of the Pyeongtaek P4 manufacturing complex’s Phase 1 from pure NAND to NAND+DRAM. Samsung’s Pyeongtaek site currently hosts P1, P2, and P3 factories. The P4 plant is expected to be completed by year-end and begin production next year. The P5 plant, under construction, will feature eight cleanrooms compared to four in P1-P4. In addition to building new factories, Samsung is upgrading old production lines, such as converting the P2 factory’s DRAM line to produce 1b DRAM or more advanced DRAM technologies.
Regarding HBM, on November 21, Samsung announced plans to increase investment in domestic and international production bases to strengthen its advanced semiconductor packaging business, focusing on HBM products due to the growing importance of packaging. Samsung signed contracts to sell and purchase semiconductor equipment worth 20 billion won, aiming to expand its Suzhou, China, production facilities. It also plans to expand its semiconductor packaging facilities in South Chungcheong Province, South Korea, to increase HBM chip production. Samsung has signed a memorandum of understanding with the local governments of South Chungcheong Province and Cheonan City for administrative and financial support to ensure smooth investment progress.
Samsung sees the massive potential of the HBM market in the AI era and is striving to catch up. The company’s next-generation HBM4 is slated for mass production in late 2025. Samsung’s recovery in the HBM market largely depends on Nvidia, which dominates the AI chip market with over 80% market share. A Samsung spokesperson stated the company has made “significant progress” with HBM3E and completed a critical certification stage. Product series expansion is expected in Q4.
To accelerate HBM R&D, Samsung is collaborating with TSMC on buffer-less HBM4 chips. Initially planned to use 7nm processes, the design will now utilize 4nm processes for better performance and efficiency.
2. SK Hynix announces the development of 16-layer HBM3E chips, with samples available early next year.
SK Hynix has been making remarkable progress in the storage market, especially in HBM. Its Q3 results set records, driven by high-performance DRAM demand. To address supply bottlenecks, SK Hynix is intensifying collaboration with Nvidia and TSMC. Nvidia CEO reportedly requested SK Hynix to accelerate HBM4 supply by six months. SK Hynix originally planned HBM4 delivery for late 2025.
Reports indicate SK Hynix is rapidly increasing the production capacity of fifth-generation 1b DRAM to meet rising HBM and DDR5 DRAM demand. The company plans to increase monthly production from 10,000 wafers early in the year to 90,000 by year-end, reaching 140,000-150,000 by mid-2025.
Publicly available information reveals that SK Hynix’s NAND flash production bases are located in South Korea and China. Some NAND capacity at the Cheongju M14, M15X, and M16 factories will be reallocated for HBM production. The M15X factory is scheduled for completion in November next year and will produce DRAM, including HBM. On November 21, SK Hynix began mass production of the world’s highest 321-layer 1Tb 4D NAND flash memory.
Capital expenditure for SK Hynix in 2023 is expected to reach 18 trillion won, slightly exceeding initial plans due to increased HBM demand and investment in Cheongju. Facility investment in 2024 is projected to surpass 20 trillion won.
SK Hynix leads HBM R&D. The company announced a transition from existing HBM3 to 8-layer HBM3E, with 12-layer HBM3E expected for mass production in Q4. HBM accounted for 30% of Q3 DRAM sales and is expected to reach 40% in Q4. SK Hynix recently disclosed at SK AI Summit 2024 that it is developing 16-layer HBM3e chips with a capacity of 48GB, targeting applications in CSPs and general-purpose GPUs. Mass production is anticipated before the HBM4 era.
TrendForce research highlights SK Hynix’s advancements in stack manufacturing, paving the way for HBM4 16-layer mass production. Hybrid bonding for higher computational bandwidth applications is also under consideration.
3. Micron announces HBM capacity expansion across multiple facilities.
TrendForce data shows HBM market shares in 2022 were SK Hynix (50%), Samsung (40%), and Micron (10%). In 2023, the shares shifted to SK Hynix (53%), Samsung (38%), and Micron (9%). Micron aims to increase its HBM market share to 20%-25% by 2025, matching its DRAM share.
Micron is expanding production in Taiwan, Japan, and the U.S. Its Taiwan factory is set to produce 1γ DRAM starting in 2025, while the Hiroshima factory will start production in 2026. In the U.S., the Idaho and New York plants are expected to begin operations between 2026 and 2028.
Micron’s financial spending for FY2024 is expected to be $8 billion, with investments focused on new plant construction and HBM assembly facilities. By FY2025, expenditures will exceed $12 billion. Micron is working on HBM4 with hybrid bonding technology, targeting 1.5TB/s bandwidth by 2026.
Micron recently announced GDDR7 graphics memory chips based on 1β process, achieving 32Gbps and system bandwidth of 1.5TB/s, a 60% improvement over GDDR6.
4. Kioxia’s K2 factory set for Q3 2025 launch.
Kioxia reported record high Q2 revenue and operating profits in FY2024, driven by NAND price recovery and increased shipments (especially eSSDs). The K2 factory in Iwate Prefecture is fully constructed and scheduled for production in late 2025, focusing on BiCS9 products. Kioxia predicts steady NAND demand growth post-2025, with flash storage demand projected to increase 2.7 times over the next five years.
Kioxia is also producing QLC-based UFS4.0 products and PCIe 5.0 NVMe EDSFF E1.S SSDs. The company plans to invest 360 billion yen over three years to develop CXL memory, targeting commercialization by the early 2030s.
Kioxia aims to IPO between December 2024 and June 2025, targeting a valuation of over 1 trillion yen.
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