Apparently, the Korean memory manufacturer SK Hynix is looking to increase its production of DDR5 memory chips at the expense of HBM. If the company proceeds this way, it is simply to maximize its profits at a time when DDR5 is considered more profitable to produce. However, we shouldn’t expect the shortage issues to be resolved overnight, because that won’t be the case. This increase in production will mainly benefit the hyperscalers!
SK Hynix is focusing on DDR5!
A memory type considered more profitable to produce:
Broadly speaking, the company plans to convert a factory and dedicate it to DDR5 memory production. Initially, this site was supposed to produce HBM4 memory, and although it commands a higher selling price, this memory is also more expensive to produce. The decision isn’t driven by pure goodwill toward consumers; it’s a pragmatic choice justified by higher operating margins—reportedly 90% this year—which shows just how profitable this type of product is!
The company’s position in the HBM sector remains secure:
The Korean company is a giant in HBM memory production and, according to sources, holds a 40% market share. Even if one factory is repurposed for DDR5, the company is therefore unlikely to be threatened, especially since the DDR5 market is facing a more severe shortage than the high-bandwidth memory (HBM) market.
But this won’t resolve the current shortages:
However, while this increase in DDR5 production is welcome, it’s important to note that it won’t resolve the current supply shortages. In fact, it is likely to be absorbed by the major consumers in the memory sector: hyperscalers, AI servers, etc. However, this could prevent overly sharp price increases like those predicted by Jefferies analysts.
