Memory prices are going up, and to some degree there’s the AI boom to thank or blame for that. You’d think that companies that make memory modules would capitalise on these, and decide to make more industrial grade memory. South Korean tech giant Samsung is reportedly considering doing the opposite, allocating some of its HBM3 and HBM3E production capacity for more general purpose DRAM.
This comes via Korean outlet DealSite, which cites a source claiming Samsung is considering shifting “30-40%” of said production capacity to that effect. Which means more DDR5, LPDDR5X and GDDR7 being made, up to 80,000 wafers a month, if the company follows through. The report notes that consumer-grade memory “offers higher margins than HBM3E”.
More specifically, Samsung expects general-purpose DRAMs like DDR5 to provide an operating profit margin of over 60%. HBM3E profit margins, on the other hand, is estimated to be around 30%. Therefore, shifting production in this direction is in line with the company’s goal of “maximising profitability”. According to machine translation of said report, anyway.
Samsung, The Surprise Ally Of Consumer Memory?
This move, if Samsung does indeed convert its production capacity this way, runs counter to what most people think would be the obvious move. Fellow memory maker Micron announced it’s going all in on “the AI-driven growth in the data centre” market. As a result, it is sunsetting its consumer-facing brand Crucial early next year.
But for better or worse, the decision isn’t made purely out of consumer interest. On one hand, Samsung does want to capitalise on the supply shortage of consumer memory. But on the other, the report also mentions that the average selling price of 12-layer HBM3E is predicted to drop by over 30% next year.
Then there’s a Samsung Electronics exec mentioned in the report who is quoted as saying that the company is competing directly with fellow memory maker SK Hynix in terms of profits. The former does supply HBM3E memory to tech giants like NVIDIA, AMD, Broadcom and Google. Of these, the green graphics brand is hinted to be the bigger player. But the company has already secured large quantities of HBM3E from SK Hynix and Micron. Hence the targeting of the general-purpose DRAM that is both undersupplied by the industry and has a higher profit margin.
(Source: DealSite)
