[Edaily Reporter JAEMIN SONG ] Driven by the expansion of artificial intelligence (AI) data centers, DRAM’s share of the global memory market is expected to grow further. With supply constraints for standard DRAM compounded by the ramp-up in High Bandwidth Memory (HBM) production, observers suggest that the “super cycle” for SamsungElectronics and SK hynix could be prolonged.

According to global investment bank UBS on the 10th, DRAM’s share of AI data center memory spending next year is estimated to reach 74%, a 6 percentage point increase from this year’s forecast of 68%. The share of server DDR is expected to expand from 55% to 57%, while HBM’s share is projected to rise from 13% to 17%. In contrast, NAND flash is expected to shrink from 32% to 26%.

It is worth noting that not only HBM but also the share of spending on server DDR is increasing. Next year, the DDR share is expected to reach 57%, more than three times that of HBM (17%). This is because, separate from HBM used in AI accelerators, demand for high-capacity DDR5 used in central processing unit (CPU)-based servers is on the rise.

This is because, in AI data centers, the ability to quickly retrieve and process data during computation is becoming more important than simply storing it. While NAND is primarily used for large-capacity data storage, DRAM enables CPUs and graphics processing units (GPUs) to immediately access the data needed for computation. In particular, demand for high-speed, high-capacity memory is rising as AI models grow in size and real-time inference services expand. While NAND also benefits from the demand for AI data storage, the structure of the market is such that DRAM spending is growing even faster.

Furthermore, the expansion of HBM production is constraining the supply of standard DRAM. Since HBM shares production facilities with standard DRAM, an increase in HBM’s production share may reduce the production capacity available for server-grade DDR and other products. SamsungElectronics forecasts that HBM’s share of the industry’s total DRAM wafer production capacity will expand from about 20% this year to around 30% next year. With rising demand and supply constraints converging, the DRAM market is likely to remain tight.

In a recent report, market research firm TrendForce stated that “the growth in demand will outpace the expansion of supply” in next year’s DRAM market. In contrast, it forecast that supply conditions for NAND will improve relatively in the second half of the year as new production capacity comes online.

SamsungElectronics and SK hynix are focusing on high-value-added DRAM businesses in response to these changes. SamsungElectronics is strengthening sales of server products, such as high-speed DDR5, alongside expanding HBM4 supply. With the average selling price (ASP) of DRAM rising by about 20% quarter-over-quarter in the third quarter, the company is expected to accelerate profitability improvements by increasing the share of high-value-added products.

SK hynix is expanding its supply of server-grade DDR5, leveraging its competitiveness in HBM. In its third-quarter earnings announcement, the company explained that increased sales of server-grade DDR5 drove its DRAM performance. It also plans to increase the supply of high-value-added products, such as DDR5 and SOCAMM (a low-power server memory), through the transition to the next-generation 1c process.

Industry analysts suggest that the concurrent growth of HBM and server DRAM is changing the structure of the memory market, which was previously heavily influenced by demand for PCs and smartphones. Given the time lag between new capital investments and actual increases in supply, a supplier-dominated market environment is expected to persist for the time being.

An industry official stated, “Given that the expansion of HBM production is constraining the supply of standard DRAM, the trend of improving earnings at SamsungElectronics and SK hynix—which have a high proportion of high-value-added products—is likely to continue for the time being.”