Morgan Stanley’s securities report points out that the market had expected HBM to tighten DRAM supply, but this expectation has not materialized. Instead, the memory industry is entering a downturn phase in the business cycle for the next few quarters.
It is estimated that from 2024 to 2027, the annual compound growth rate of the overall potential market for special application IC (ASIC) HBM will be 88%, higher than the 77% for GPU HBM.
In terms of value, the former will reach 28 billion USD by 2027, lower than the latter’s 56 billion USD.
The outlook for HBM is optimistic, but due to other uncertainties in the market, previous optimism has been replaced by anxiety. Recently, the outlook remains cautious, and competition in both the HBM and standard memory product markets has intensified.
Memory manufacturers’ EPS has started to decline rapidly, and they also face concerns over inventory, tariffs, and over-investment.
Additionally, the recovery of ASICs seems more like a zero-sum game, essentially a shift in market share within the HBM market.
Trying to pick winners in the HBM space is like attempting to predict the unpredictable.
Investors will have to accept that the environment in 2024 will not persist, and 2025 will mark a mean reversion for HBM.
The battle for key HBM customers will continue, with each manufacturer striving to capture market share. This suggests that after excessive investment, the industry will eventually enter a phase of inventory digestion and idle capacity oversupply.
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