SK Hynix Conference Call: DRAM supply shortage may continue into the second half of the year; HBM4 is being expanded at full capacity but still difficult to meet customer demand.

SK Hynix Conference Call: DRAM supply shortage may continue into the second half of the year; HBM4 is being expanded at full capacity but still difficult to meet customer demand.

SK Hynix sent a clear signal during its latest earnings call: the tight supply situation in the memory market will continue, and the company is making every effort to expand production of high-end products but still cannot fully meet customer demand. This supply-demand pattern is expected to persist through the second half of this year.

SK Hynix stated that DRAM inventory dropped sharply year-on-year in the fourth quarter, with products shipped to customers immediately after production, leaving virtually no space for inventory accumulation. The company expects that as time progresses into the second half of this year, DRAM inventory will shrink further, and the tight supply for customers could continue for some time.

Regarding High Bandwidth Memory (HBM) business, SK Hynix revealed that despite currently maximizing the production of HBM4, it is still difficult to fully meet customer demand. The company’s goal is to achieve an overwhelming market share in HBM4, continuing its leading position in HBM3 and HBM3E products.

Furthermore, the company maintains a cautious attitude towards large-scale manufacturing expansion in the United States, but has announced a $10 billion investment to establish an AI solutions company in the US, utilizing advanced chip technologies including HBM to provide optimized AI systems for data center customers.

Persistent Memory Supply Shortage

SK Hynix elaborated on the current supply situation during the call. The company’s DRAM inventory saw a significant year-on-year decline in the fourth quarter, with products shipped immediately after production, leaving little room for inventory buildup.

The company further indicated that DRAM inventory is expected to contract further in the second half of this year, meaning customer supply shortages may persist for quite some time.

For NAND flash, SK Hynix stated that SSD-driven inventory has been decreasing since the second half of last year and is currently at a level similar to DRAM.

HBM4 Strategy: Targeting Overwhelming Market Share

SK Hynix’s HBM4 supply strategy became a focus of the conference call. The company says it aims to achieve an overwhelming share in the HBM4 market, continuing the dominance it established with HBM3 and HBM3E products.

The company emphasized that its competitive edge in the HBM market is not limited to technological leadership, as it has helped shape the market through close collaboration with customers and infrastructure partners since the HBM2E era. SK Hynix stated that its accumulated mass production experience and the trust earned in product quality represent advantages that are hard to replicate in the short term.

To reach its goal of gaining an overwhelming market share, SK Hynix is focused on improving yields to levels comparable with the previous 12-layer HBM3E, striving for market leadership in HBM4.

Even Full Capacity Can't Meet Demand

Despite going all out to expand production, SK Hynix admitted supply remains tight. The company said it is currently maximizing production, yet still cannot fully meet customer demand, and expects some competitors to enter the market. Nevertheless, SK Hynix emphasized that its market leadership and position as a leading supplier will continue.

Regarding HBM4 technology, SK Hynix said it uses the fifth-generation 10nm-class (1b) process applied to existing products to meet customer performance requirements. The company added that its goal is to capture demand through proprietary packaging technologies.

On overseas expansion, SK Hynix is showing a cautious attitude. As for anticipated U.S. semiconductor tariffs, the company stated it is currently monitoring discussions between the Korean and U.S. governments. The company added that overseas semiconductor fab investments involve many internal and external variables that must be carefully evaluated, and will share future direction at a later date.

Notably, despite its cautious stance towards large-scale manufacturing expansion in the United States, SK Hynix has developed a selective investment plan. The company announced it will establish an AI solutions company in the U.S., tentatively named AI Company (AI Co.), leveraging advanced chip technologies including HBM to provide optimized AI systems for data center customers. SK Hynix stated it will invest $10 billion in this enterprise, using a capital call deployment model.

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