Samsung, SK Hynix Strengthen Share of DRAM Advanced Processes

　Following last year's memory semiconductor downturn, Samsung Electronics and SK Hynix are aggressively increasing their focus on DRAM by expanding their advanced processing technologies. This move was expected as orders for high bandwidth memory (HBM) and double data rate 5 (DDR5) are expected to increase, driven by strong artificial intelligence (AI) demand.

　　However, the outlook for NAND flash remains similar to last year's tightening stance, mainly because most of the investment has gone into advanced DRAM while the actual demand recovery remains lukewarm. samsung electronics continued to make significant capital investments last year, seemingly capitalizing on the limited investments of its competitors as an opportunity to bolster its competitive advantage in the advanced processing space.

　　Considering the recent rebound in DRAM prices, Samsung Electronics and SK Hynix are considering increasing semiconductor wafer inputs at their plants. This is to accelerate the transition to 10-nanometer (nm) fourth-generation (1a) and fifth-generation (1b) versions for the production of high-value products such as HBM, DDR5 and low-power (LP) DDR5. However, overall DRAM supply increment is expected to be limited this year as the semiconductor industry continues to cut DDR4 inventories and focuses investment on finer processes where supply growth is slow.

　　Samsung Electronics plans to significantly increase its investment in DRAM wafers this year, driven by the full operation of its Pyeongtaek Plant 3 (P3). With the significant production adjustments centered on conventional DRAMs that began in the second half of last year, it is expected that the start-up rate will gradually normalize by the end of this year.

　　SK Hynix is mainly focusing on expanding the production of advanced processes at its M16 and M14 plants in Korea. The company is also accelerating the transition to advanced processes at its Wuxi plant in China, following the shift in U.S. semiconductor equipment export controls to a full licensing system last October. As China still bans the import of extreme ultraviolet (EUV) lithography equipment, SK Hynix is reportedly considering a separate EUV process in Korea.

　　Samsung Electronics' and SK Hynix's emphasis on expanding their share of advanced processes is driven by the expectation that demand for high-value DRAMs will continue to be strong this year.HBMs are used with AI semiconductors, with a significant increase in the availability of fourth-generation (HBM3) and the start of new volume production of fifth-generation (HBM3E).DDR5 is currently installed in AI servers and PCs, with a projected transition from this year into DDR5 is currently installed in AI servers and PCs and is expected to transition to general-purpose servers starting this year.

　　Samsung Electronics continues to pursue an aggressive NAND flash reduction strategy, focusing on 128-layer (Gen 6), after halving wafer investment in its NAND flash fabs at the end of last year compared to the beginning of the year. The company is pushing for a direct transition to 236-layer (Gen 8), skipping the intermediate generation, due to the significant price drop and weak sales of older-generation NAND flash.

　　SK Hynix is also planning a process transition centered on 238 layers this year. However, analysis suggests that aggressive expansion of advanced processing of NAND flash may face challenges as last year's capital investment was largely focused on expanding HBM capacity.