Samsung is preparing to rearrange its priorities in memory production due to the rapidly growing demand for artificial intelligence infrastructure. According to information from industry sources, the company is considering allocating the capacity in its own facilities to HBM products, known as high-bandwidth memory, while transferring a larger portion of standard DRAM production to external sources. The fact that HBM memories, especially used in artificial intelligence accelerators, have become one of the most demanded components in the data center market in recent years, also affects the capacity plans of manufacturers. For this reason, Samsung wants to allocate more resources to HBM production, which offers higher added value. If the plan is implemented, the company is expected to shift some processes in DDR5 production to its business partners.
According to the information conveyed, Samsung is negotiating with its existing production partners to complete the DDR5 production lines earlier than planned. It is also stated that the company is evaluating the possibility of investing in new outsourced production lines. Such an arrangement could allow Samsung to divert some lines devoted to standard DRAM production in its own factories to different types of memory. HBM production differs from classical DDR5 memories not only in terms of the production process but also in terms of packaging and stacking technologies. Therefore, increasing production capacity requires not only separating more wafers, but also a corresponding expansion of advanced packaging processes.
Samsung HBM wants to increase production capacity
HBM memories have become a critical component in artificial intelligence and high-performance computing products, especially from Nvidia, AMD and other accelerator manufacturers. In this type of memory, much higher data transfer speeds can be achieved by placing multiple DRAM layers on top of each other. In return, while the production process is more complex compared to classical desktop and server memories, the revenue per product can also reach higher levels. For Samsung, shifting its production capacity to the HBM side may therefore be a choice compatible with the current demand structure. However, it is not yet clear to what extent the company will reduce its production volume in the standard DRAM market and what share of the total production its outsourcing partners will take.
According to the information provided by the sources, the companies with which Samsung is in talks include Dreamtech operating in India, Hanyang Digitech in Vietnam and SFA Semicon based in the Philippines. It is on the agenda for these companies to provide capacity in different production and packaging processes for Samsung. Increased outsourcing could help Samsung reduce the production load on its own factories, especially for more standardized products like DDR5. However, how such a transition will be reflected in the memory supply chain in the short term is also an issue that needs to be monitored. Additional contractions in DDR5 supply, especially for desktop computer, laptop and server manufacturers, may directly affect memory prices and system costs.
Shifting production capacity to the HBM side in the DRAM market is not a trend unique to Samsung. Increasing investments in AI servers are leading memory manufacturers to devote their most advanced production lines to higher-margin products. Despite this, since the consumer electronics, computer and traditional server markets continue to demand DDR5, standard DRAM production must be maintained at a certain level. Samsung’s outsourcing model stands out as one of the methods that can be used to meet two different demand groups at the same time. Once the details of the plan are finalized, it will be more clear which DRAM products the company will outsource and how much of an increase in HBM capacity it aims to achieve.