[Concall] Samsung Semiconductor to Increase HBM Supply Next Year... "Customer Agreements Completed" (Comprehensive)

Next Year's HBM Supply Capacity to Be 2.5 Times This Year's
HBM3 Expected to Account for Over Half of Total Volume Next Year

"Memory Market to Continue Demand Recovery Next Year"
Expanded NAND Production Cuts and Focus on Leading-Edge Process Transition

Samsung Electronics is increasing its supply volume of memory semiconductors for artificial intelligence (AI), called High Bandwidth Memory (HBM), to the largest level in the industry. The company has already reached agreements with customers regarding next year's HBM supply and is aggressively expanding its business centered on the latest products, HBM3 and HBM3E. The proportion of HBM3 in the total HBM volume next year is expected to exceed half.

On the 31st, during a conference call following the announcement of third-quarter earnings, Samsung Electronics stated, "We are actively expanding the business of new products HBM3 and HBM3E," and added, "We will secure more than 2.5 times the HBM supply capacity next year compared to this year to maintain the industry's top position." Regarding this, the company also explained, "We have already completed supply agreements with major customers for the relevant volume for next year."

Samsung Electronics Pyeongtaek Campus viewed from the air. [Aerial filming cooperation=Seoul Metropolitan Police Agency Aviation Unit, Pilots: Lieutenant Shin Seung-ho - Lieutenant Park Ji-hwan, Crew: Lieutenant Park Sang-jin] Photo by Kang Jin-hyung aymsdream@

HBM is a high-performance memory that stacks multiple DRAM chips to increase data processing speed. Recently, due to the generative AI effect, demand in the market is surpassing supply. Samsung Electronics is currently mass-producing HBM3 and plans to increase the number of customers in the fourth quarter to start full-scale sales. Through this, the proportion of HBM3 in total HBM sales volume will exceed half in the first half of next year.

They are also accelerating the business promotion of the latest product, HBM3E. Kim Jae-jun, Vice President of Samsung Electronics Memory Business Division, said, "We have started supplying 24GB samples with a speed of 9.6Gbps and plan to begin in the first half of next year," adding, "We are also preparing to supply 36GB product samples in the first quarter of next year." He further stated, "In the second half of next year, we plan to respond to the increasing AI market demand through a rapid transition to HBM3E."

Regarding the memory market next year, Samsung Electronics presented a positive outlook. As market inventory normalizes, demand for AI products is increasing, and the trend of higher capacity in PCs and mobiles is driving demand, leading to price increases. On the supply side, the company expects product supply to be limited due to industry-wide production cuts and a recent reduction in capital expenditures (CAPEX) in the industry. They also explained that investment is focusing on HBM.

Currently, Samsung Electronics is reducing production of DRAM and NAND. To normalize inventory quickly, they plan to continue selective production adjustments and production cuts. In particular, they intend to make a larger reduction in NAND production. However, based on CAPEX maintained to secure mid- to long-term competitiveness, the proportion of advanced process products supplied will continue to increase.

In the case of NAND, efforts are being made to increase profitability by transitioning to advanced processes. Vice President Kim said, "We prioritize cost and product competitiveness and aim to accelerate the transition to advanced processes V7 and V8." He also explained, "Recently, we received VEU (Verified End User) certification from the U.S. government, which has significantly reduced uncertainties regarding the process transition at the Xi'an plant in China."

In the foundry (semiconductor contract manufacturing) business, Samsung Electronics is increasing investment in advanced processes and expanding generative AI-related business. The Samsung Electronics Foundry Division achieved the highest quarterly orders ever in the third quarter due to the high-performance computing (HPC) effect. To respond to demand for advanced processes, investments are being made mainly at the Pyeongtaek campus and the Taylor plant in the U.S., with plans to increase this year's investment compared to last year.

Jung Ki-bong, Vice President of Samsung Electronics Foundry Division, explained, "With the rapid increase in generative AI demand based on large language models (LLM), there is a continued shortage of accelerator modules for data center AI," adding, "We will quickly expand supply capacity focusing on HBM and 2.5D packages, which are major bottlenecks, and monitor additional supply and demand situations to expand capacity as needed."

Samsung Electronics recorded sales of 67.4 trillion KRW and an operating profit of 2.43 trillion KRW in the third quarter. The launch of flagship smartphone new products and increased sales of premium display products offset the semiconductor (DS division) business slump, which has been continuously in deficit this year. The DS division posted an operating loss of 3.75 trillion KRW in the third quarter, reducing the deficit compared to 4.58 trillion KRW in the first quarter and 4.36 trillion KRW in the second quarter.

This content was produced with the assistance of AI translation services.