SK Hynix to prioritise DDR5 expansion over HBM4 in new production push
SK Hynix to reportedly pivot planned HBM4 production to DDR5 as the company chases higher margins
SK Hynix is one of the world’s largest memory producers, reportedly accounting for 40% of the HBM market. Secure in its position as the global HBM leader, SK Hynix has reportedly shifted some of its planned HBM4 manufacturing capacity to DDR5, where shortages are more severe.
According to Chosun, SK Hynix now plans to convert an HBM3E manufacturing facility to DDR5 memory production. Previously, this site was intended to be used for HBM4 production. While HBM prices are higher than DDR5, DDR5 is easier to produce. It has also been reported that SK Hynix’s DDR5 memory profit margin could reach 90% this year, making DDR5 production more lucrative.
The company [SK Hynix] is adjusting its resource allocation to secure additional profits in the general-purpose DRAM market, where supply shortages are severe, rather than engaging in excessive competition for capacity expansion.
In the short term, SK Hynix believes that shifting its focus from HBM to general-purpose DDR memory will deliver higher profits. SK Hynix also believes that this move will not harm the company’s position as the global leader in HBM memory production.
Sadly, SK Hynix’s new DDR5 memory production will not have a major impact on DRAM prices. Even with higher production levels, shortages will remain. However, this new production will help alleviate shortages and may lessen future price rises.
According to industry sources on the 23rd, SK Hynix is reportedly delaying the conversion of some 5th-generation HBM (HBM3E) production lines, which were originally scheduled to transition to HBM4. The company plans to secure additional profits by increasing its responsiveness to the general-purpose DRAM market, which currently records higher operating profit margins than HBM. The industry view is that this decision is based on the judgment that there is no need to rush the transition to HBM4 and HBM4E (7th-generation HBM), given that the company has already secured a solid position in the HBM market.
This new production helps, but the shortage will continue
Overall, SK Hynix’s plan is good for consumers. After all, no consumer-focused products use HBM memory. Shifting from HBM production to DDR5 production means there will be more capacity to produce memory for the products consumers actually buy. This will help OEMs acquire enough memory to produce their devices. That said, much of this new memory production will be purchased by hyperscalers and the wider AI industry.
All major memory manufacturers are trying to increase their memory production. Sadly, it takes a long time (several years) to build new manufacturing sites and build the equipment needed to produce more DRAM. Retooling an existing manufacturing site is a much faster process. For this reason, SK Hynix’s planned conversion of HBM3E manufacturing lines to DDR5 should happen relatively quickly.
You can join the discussion on SK Hynix’s plan to accelerate its DDR5 memory ramp on the OC3D Forums.
