Storage plummets! Korean media: Nvidia Rubin expected to cut production, SK Hynix slows HBM4 expansion

An industry report from South Korea has triggered a chain reaction in the global market, bringing concerns over the supply prospects of high-bandwidth memory chips to the forefront.

According to a report by Korean media on the 23rd, SK Hynix is slowing the pace of mass expansion for sixth-generation high-bandwidth memory chips (HBM4) and reallocating resources towards the general-purpose DRAM market.

This news became the trigger for a major correction in memory stocks. Both Bloomberg and CNBC cited sources saying, "Traders are pointing to a Korean media report—SK Hynix is slowing expansion of AI memory chip production and shifting focus back to general-purpose DRAM."

Since memory stocks account for about 60% of the KOSPI index's weight, the Korean stock market plummeted over 10%, activating the circuit breaker mechanism. The panic soon spread to global markets.

The report quoted a person familiar with SK Hynix's internal situation as saying, given that the production forecast for Nvidia's next-generation 'Rubin' chip continues to be revised downward, the company's management sees no need to accelerate the conversion to HBM4 production lines. This statement has cast doubt on the demand outlook for high-end AI infrastructure and put pressure on companies like Nvidia and the related supply chain.

During Tuesday's US trading session, Micron fell 13%, and Western Digital fell 8.4%.

General DRAM profit margins surpass HBM, prompting SK Hynix to reallocate resources

The core logic of the Korean media report lies in changes in the profitability structure within the memory market.

As of the first quarter this year, the gap in operating profit margin between general DRAM and HBM has widened to over 15 percentage points, with general DRAM holding the advantage. Daishin Securities predicts that the theoretical peak for general DRAM operating profit margin could reach 90% within the year.

Against this backdrop, SK Hynix is reportedly delaying plans to convert some fifth-generation HBM (HBM3E) production lines to HBM4, instead increasing its response capabilities for the general DRAM market. SK Hynix management must face the reality that competitor Samsung Electronics is already earning substantial profits through general DRAM.

SK Hynix also disclosed in its first-quarter financial report that the average selling price of DRAM has risen to the mid-60% range, and it has signed a three-year DDR5 supply contract with Microsoft, which is interpreted as the company securing long-term visibility in general DRAM revenues.

Wall Street bullish on DRAM cycle, differences remain over HBM market share

Several overseas investment banks' assessments corroborate with the aforementioned strategic direction.

Goldman Sachs believes that it is sufficient for SK Hynix to maintain a combined market dominance of over 50% in HBM3 and HBM3E at least until 2026;

Morgan Stanley sees the overall memory pricing cycle, rather than defending HBM market share, as the core driver for SK Hynix's valuation. Based on a forecast that average DRAM prices will rise 62% by 2026, they have raised profit forecasts by 56% to 63%.

However, the slowdown in HBM4 expansion opens a window for competitors.

According to Counterpoint Research, SK Hynix's HBM market share was 57% in the fourth quarter last year, but if Samsung Electronics successfully achieves mass production of HBM4 in the second half of this year, SK Hynix's share may gradually narrow to the 50–60% range.

Pressure emerges for high-end AI supply chain, Nvidia Rubin system under scrutiny

This report has triggered market volatility, reflecting investors' deep concerns over the pace of high-end AI infrastructure construction.

SK Hynix insiders clearly stated in the report that the production forecast for Nvidia's next-generation "Rubin" chip is being revised downward, which directly impacts market expectations for robust HBM4 demand.

From a broader perspective, this development also echoes the challenges in advancing high-end Nvidia systems. Vera Rubin racks equipped with HBM4 chips have driven up overall costs due to significant memory price increases, squeezing the profit margin of hyperscale data center operators.

Whether SK Hynix's decision to slow HBM4 expansion is a strategic move to actively manage pricing or a signal of weakening end demand is still debated in the market, but the risk-aversion sentiment triggered globally has already become reality.

Risk Disclosure and DisclaimerThe market involves risk, and investment needs to be cautious. This article does not constitute personal investment advice nor does it consider the special investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article fit their specific circumstances. Investment based on this article is at your own risk.