After memory manufacturers massively switched to HBM memory production for AI workloads, Samsung is considering a reverse move.
The pendulum seems to have swung too far: the shift in memory production from DDR to HBM is so significant that the cost of DDR memory has risen to such an extent that production is becoming attractive again. Samsung has observed this. The manufacturer is considering building less HBM and more PC and server memory.
From DDR to HBM…
The demand for HBM memory for AI workloads has been so high in recent months that manufacturers are massively deploying their production lines to produce such memory modules. HBM memory for the AI market yields more profit than DDR and LPDDR modules for the PC and server markets, and both types roll off the same production lines.
The hunger for AI memory claimed DDR4 memory as its first victim. That older memory type with smaller margins was not profitable enough, leading manufacturers to start allocating production capacity to HBM. When that wasn’t enough, capacity for classic DDR5 (and LPDDR5) memory also had to be sacrificed.
For this reason, Micron recently discontinued its Crucial brand: the company wants to go all-in on HBM and is therefore abandoning decades of market share and a good reputation in the PC memory market.
The consequences are being felt: shortages are now shifting to the DDR5 market, where the price for memory modules is tripling. You will notice this next year at the checkout when you buy a new computer.
…and vice versa
The shift is so drastic that Samsung is now considering a reverse move, according to Digitimes. With stronger competition in the HBM segment, prices there have become more competitive. However, the price of DDR memory has skyrocketed, so Samsung estimates that it is more profitable to produce a bit less HBM and a bit more DDR5. The manufacturer would produce an additional 80,000 DRAM wafers monthly, at the expense of HBM.
Whether that will have an impact on the price remains to be seen. In any case, it shows that the distinction between PC and AI memory is not that relevant in practice, since production takes place in the same factories. The price and demand for HBM influences that for DDR and vice versa. In other words: the whole world is paying for the hunger for AI chips from a few major players.