Samsung has allocated about 70 percent of its memory production capacity to long-term supply agreements running as far out as 2031, according to industry sources cited by Seoul Economic Daily. Its counterparties include Nvidia, Microsoft and Google. Even those customers are not receiving everything they have contracted for.
What is left trades at a steep markup. A 36-gigabyte HBM3E module sells for about 2.87 million won, or $2,100, on the spot market, four to five times the 500,000 to 700,000 won buyers pay under long-term agreements, according to the memory research firm MegaGrid Supply. A 16-layer HBM4 module, still being prepared for mass production, goes for about 4.8 million won spot, or $3,500.
The squeeze extends past high-bandwidth memory into the DRAM those modules are built from. Korean export volumes of DRAM used in AI accelerators fell 13.2 percent between May and July, to 591.74 million units, while the value of total DRAM exports rose 18.5 percent to $13.55 billion and the average unit price climbed 36.6 percent to $22.90. Fewer chips left the country, and they were worth considerably more.
HBM4 is the reason volumes are falling. Early production yields are lower than HBM3E’s, so each finished module consumes more DRAM, and manufacturers are shifting wafer capacity toward it because it sells for roughly twice as much. “HBM tends to see yields fall with each new generation,” Ahn Ki-hyun of the Korea Semiconductor Industry Association told the paper. “As memory makers ramp up production, the volume of DRAM consumed rises and total export volumes end up shrinking.”
Long-term agreements are a recent feature of a market that used to be famously cyclical, and they have given manufacturers demand visibility they did not previously have. They have also removed most of the supply that a buyer without a contract could reach.
Both Korean manufacturers are building. Samsung executives are reviewing a plan to convert S5, the only foundry line at its Pyeongtaek campus, into memory production as early as next year, taking capacity out of the foundry business that has been courting AI chip customers and putting it into the one that cannot meet demand. SK hynix, which has expanded in Yongin and the Honam region, is weighing a joint venture plant in Japan.
The financial result is a record. Analyst consensus puts Samsung’s third-quarter operating profit at 116.38 trillion won, up from 89.49 trillion in the second quarter, on revenue of 206.64 trillion won. Operating profit above 100 trillion won would be a first for a South Korean company. SK hynix is forecast to post 79.16 trillion won in operating profit, up 30.7 percent quarter on quarter.
Memory is the binding constraint on the AI build-out, and the numbers attached to it keep growing, from Micron passing a trillion dollars in market value in May to the Vera Rubin generation now absorbing the HBM4 output that everyone else is bidding for. Ahn does not expect the new plants to fix it. “Even once the planned new plants come online,” he said, “the shortage will be eased rather than eliminated.”
Sources: Seoul Economic Daily, Wccftech
–
By the Control Plane Editorial Team