SK Hynix, the world’s second-largest memory maker (after South Korean chip giant Samsung), recently turned down a 500 billion won ($374 million) advance from an unnamed AI accelerator company to acquire a dedicated high-bandwidth memory (HBM) production line.
Instead, according to The Korean Economic DailySK Hynix has pledged to supply HBM products worth more than 1 trillion won (US$749 billion) to Nvidia, the leader in AI chip development.
HBM, a critical component in AI accelerators and high-performance computing, has become a hot commodity as demand for AI chips continues to rise. Nvidia’s AI chips, which are critical in data centers and AI applications, rely heavily on HBM, making memory vendors like SK Hynix key players in the supply chain.
AI and Data Center Growth
Samsung and SK Hynix, the world’s two largest DRAM manufacturers, are both expanding their HBM production capabilities. Samsung is currently building a new DRAM and HBM production line at its Pyeongtaek facility, which will supply AI accelerator chips for companies like AMD. Meanwhile, SK Hynix recently entered into a partnership with TSMC to advance HBM development.
SK Hynix’s decision to reject Nvidia’s rival’s offer underscores its strong commitment to Nvidia, which continues to dominate the AI chip market. The global DRAM market, including HBM, is expected to double to $175 billion this year, largely driven by growth in AI and data center technologies.
Both Samsung and SK Hynix stand to benefit from this boom, with increasing investment in DRAM production. Samsung’s capital expenditure on DRAM is expected to increase 9.2 percent in 2024 to $9.5 billion, while SK Hynix is set to triple its DRAM spending to $7.1 billion this year.
As AI continues to grow, memory chipmakers like SK Hynix and Samsung are ramping up HBM production to meet rising demand from tech giants like Nvidia. HBM prices, currently five to six times higher than standard DRAM products, are expected to further boost profitability for both companies as they continue to capitalize on the skyrocketing AI market.
