HBM4 is the key to victory or defeat, UBS: Samsung's market share will surpass SK Hynix next year

UBS's latest forecast predicts that Samsung Electronics will surpass SK Hynix next year, becoming the leader in the high bandwidth memory (HBM) market. With the industry's largest customer, NVIDIA, increasing its adoption of Samsung's sixth-generation HBM (HBM4), and emerging key customer AMD designating Samsung as a major supplier, planning to integrate Samsung's HBM4 products into its Helios AI platform, Samsung has further solidified its market position.

HBM4 is the key to victory, UBS: Samsung's market share will surpass SK Hynix next year (Image: Shutterstock)

According to the latest report released by UBS on July 30, it is estimated that Samsung Electronics will officially match and surpass SK Hynix in HBM bit shipments starting from the HBM4 generation.

UBS analyst Nicolas Gaudois predicts that Samsung's HBM bit shipment market share will reach 41% next year, rising to first place globally; SK Hynix, which has a market share of 48% this year, will drop to 39% next year, falling to second place; Micron is expected to maintain third place with a 20% market share.

It is noteworthy that UBS's previous report released in May had originally estimated that Samsung would not catch up to SK Hynix until 2027, but the latest report has advanced this market landscape reversal to before 2027.

An industry insider familiar with Samsung's business stated, "Samsung is making the fastest progress in HBM4 certification and yield improvement."

He added, "Considering the certification speed of hyperscale cloud providers and the continuous increase in supply, the actual market development is likely to be highly consistent with UBS's forecast." In fact, although NVIDIA has been relatively conservative in its procurement attitude towards Samsung's HBM3E in the past, it has now shown a strong willingness to adopt HBM4.

On the other hand, AMD has also listed Samsung as a major supplier and plans to prioritize the use of Samsung's HBM4 in its next-generation AI platform Helios.

This means that with the arrival of the HBM4 generation, the market-leading advantage established by SK Hynix to date is facing increasing challenges.

In response to competition, SK Hynix is continuously expanding its capital expenditures.

UBS pointed out that during the second-quarter earnings call, SK Hynix's management raised this year's capital expenditure guidance to the high range of over 40 trillion Korean Won.

However, analysts noted that if SK Hynix relies solely on existing production bases in Icheon, Gyeonggi Province, and Cheongju, North Chungcheong Province, its expansion speed may still lag behind Samsung. In contrast, Samsung has reserved a large amount of undeveloped land in Pyeongtaek, which is expected to provide greater expansion space.

Additionally, SK Hynix stated that the progress of its long-term supply agreement (LTA) renewals is better than expected.

So far, the company has completed 10 LTA contracts, including supply agreements with major hyperscale data center operators in the United States and original equipment manufacturers (OEMs).

UBS believes that while LTAs may limit short-term price increase space, they will help enhance the company's profitability and shareholder returns in the long run.

UBS also pointed out that the signs of SK Hynix lagging behind Samsung in the transition to HBM4 are also reflected in its operational performance.

According to UBS statistics, SK Hynix's average selling price (ASP) for DRAM in the second quarter increased by only 30% quarter-on-quarter, mainly because HBM4 only began to ship in large quantities towards the end of the quarter.

In contrast, Samsung prioritized increasing HBM4 production capacity and expanded supply to NVIDIA and AMD, thus benefiting earlier from the high prices brought by HBM4.

In contrast, SK Hynix, due to its slower transition to HBM4, is relatively lagging in enjoying the high ASP bonus