The global supply of high-performance memory chips is expected to remain constrained throughout 2024, driven by the soaring demand for artificial intelligence technology.
What Happened: The supply of high-end memory chips is projected to remain tight due to the exponential demand for AI technology, as per a CNBC report on Tuesday. This is likely to affect the supply of these chips for the rest of 2024 and well into 2025.
Leading memory chip suppliers, including SK Hynix and Micron Technology Inc (NASDAQ:MU), are already facing a shortage of high-bandwidth memory chips for 2024, with the stock for 2025 also nearly depleted.
′′We expect the general memory supply to remain tight throughout 2024," Kazunori Ito, director of equity research at Morningstar said in a report.
The demand for AI chipsets has significantly boosted the high-end memory chip market, benefiting major players such as Samsung Electronics (OTC:SSNLF) and SK Hynix, the top two memory chipmakers globally.
"The manufacturing of these chips are more complex and ramping up production has been difficult. This likely sets up shortages through the rest of 2024 and through much of 2025," said William Bailey, director at Nasdaq IR Intelligence.
Chip manufacturers are competing intensely to produce cutting-edge memory chips to capitalize on the AI surge.
In a recent press conference, SK Hynix announced its initiation of mass production for the latest HBM chips, the 12-layer HBM3E, starting in the third quarter. Samsung Electronics, on the other hand, plans to commence mass production in the second quarter, having already shipped samples of this advanced chip, marking an industry-first achievement.
"Currently Samsung is ahead in 12-layer HBM3E sampling process. If they can get qualification earlier than its peers, I assume it can get majority shares in end-2024 and 2025," said SK Kim, executive director and analyst at Daiwa Securities.
Why It Matters: The global race to control chip supply is intensifying, with China recently overtaking the U.S. in semiconductor spending. This has become a key focus for Western governments in their efforts to compete with China in the industry.
Additionally, the U.S. and China are set to discuss the potential risks of advanced AI in upcoming talks in Geneva. The talks will explore ways to mitigate the potential dangers of this emerging technology, which is driving the demand for high-end memory chips.
Meanwhile, NVIDIA Corp (NASDAQ:NVDA) is expected to continue delivering strong pricing power and upside surprises through fiscal-year 2026, according to HSBC Global Research. This is likely to further fuel the demand for high-end memory chips.
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