The semiconductor market, which began to rebound in October last year, has experienced a rapid slowdown in the second half of this year. This downturn is attributed to a lack of recovery in consumer demand for IT products such as smartphones and PCs, coupled with aggressive increases in shipments by Chinese memory companies. ChangXin Memory Technologies (CXMT) and Fujian Jinhua Integrated Circuit (JHICC) have been selling DDR4 8-gigabit (Gb) DRAM at half the market price, ranging from $0.75 to $1. Last month, the average fixed transaction price of this product for PCs plummeted by 20.59% to $1.35 compared to the previous month.
This year, the domestic semiconductor industry has been dominated by high-value-added artificial intelligence (AI) semiconductors, including high-bandwidth memory (HBM). The demand and prices of HBM have soared due to aggressive AI data center investments by global big tech companies, leading to a continued upward trend. In contrast, the demand for IT products such as smartphones and PCs has decreased, intensifying the polarization between these products. Meanwhile, Chinese memory companies are posing an increasing threat with their rapid expansion of production capacity and low-price policies.
The growth of the memory semiconductor market this year has been led by the fifth-generation high-performance DRAM, HBM3E. SK Hynix supplied HBM3E products to NVIDIA’s AI accelerators, achieving a record-high operating profit of over 7 trillion won in the third quarter. Although Micron has also started supplying to NVIDIA, SK Hynix maintains a near-monopoly status considering production volumes. Samsung Electronics, which has not yet passed NVIDIA’s quality tests, is accelerating its efforts to achieve mass production by the first quarter of next year.
The semiconductor industry predicts that the polarization phenomenon in the memory semiconductor market will intensify until the first half of next year. Domestic semiconductor companies, including Samsung Electronics and SK Hynix, plan to focus on securing competitiveness, primarily in AI server-related memory.
Next year’s memory demand is also expected to focus on AI memory such as HBM. The share of HBM in the global DRAM market has risen from 8% last year to 21% this year and is expected to increase to 34% next year. NVIDIA is considering advancing the launch of its next-generation AI accelerator, “Rubin,” from 2026 to the third quarter of next year. This product will feature eight sixth-generation HBM (HBM4) units. SK Hynix plans to supply samples of the industry’s first 16-layer HBM3E products early next year and launch 12-layer HBM4 products in the second half. Samsung, which has faced setbacks in the HBM market, plans to mass-produce HBM4 based on a 10-nanometer-class sixth-generation (1c) DRAM, a generation ahead of SK Hynix, and is focusing its efforts accordingly.
Global investment banks and market research firms predict that the cold wave in the general memory market will continue until the first half of next year. In the DRAM sector, the expansion of Chinese memory supply is increasing, while in NAND, there are many adverse factors to be resolved, such as the slowdown in demand for enterprise solid-state drives (SSDs), which have been driving growth. CXMT’s DRAM production capacity, which was only 40 thousand wafers per month until 2020, is expected to increase to 300 thousand wafers per month next year. This is equivalent to 85% of the capacity of Micron, the world’s third-largest DRAM manufacturer.
Morgan Stanley stated in a report, “The intensifying competition with Chinese memory companies is likely to negatively impact the sustainable profitability of general memory,” adding, “The first half of next year will be an extension of the second half of this year.”
The price outlook is also bleak. TrendForce has adjusted its forecast for the contract price change rate of PC DDR5 DRAM in the first quarter of next year from a 3.1% decline to a 13.4% decline, and the second quarter forecast from -3.2% to -8.4%. The rebound is expected in the third quarter, with prices rising by about 12%. NAND follows a similar trend. The contract price change rate for triple-level cell (TLC) 512Gb NAND has been adjusted from -13.7% to -21.4% for the first quarter and from -3.7% to -9.8% for the second quarter.
Park Yoo-ak, a researcher at Kiwoom Securities, said, “Between the fourth quarter of this year and the second quarter of next year, the supply growth rate will exceed the demand growth rate due to the increase in DRAM operating rates by suppliers and the increase in product shipments by CXMT.”
