| | | JPMorgan: Shortage of HBM is expected to continue until 2027, driven by dual growth of AI chips and sovereign AI.
Zhitong Finance · 06:32
news.futunn.com
JPMorgan recently released a report on the memory market, stating that the tight supply and demand in the HBM market will continue until 2027. Looking at the long term, HBM remains the core engine for growth in the DRAM Industry.
JPMorgan recently released a market research report on memory, stating that the supply and demand tension in the HBM market will continue until 2027. This market will continue to expand under the resonance of supply and demand tension, technological iteration, and AI demand, with SK Hynix and Micron leading the way due to their technical and production capacity advantages. The sovereign AI wave injects new momentum into Industry growth. Despite short-term disruptions such as certification delays and capacity ramp-ups, HBM is still seen as the core engine for long-term growth in the DRAM Industry.
Supply and demand and technology trends in the HBM market: shortages and iterations coexist.J.P. Morgan states that the tight supply situation in the HBM (High Bandwidth Memory) market is expected to last until 2027. This year, the HBM market is likely to continue facing shortages, while the supply surplus expected in 2026-2027 will gradually ease, with channel inventory anticipated to increase by 1-2 weeks, reaching a healthy level. The delay in Samsung HBM certification adds further strain. $NVIDIA (NVDA.US)$The strong demand for bits driven by the Rubin GPU (high trade loss rate) is the main reason for the current supply-demand tightness.
The pace of technological iteration is normal, with HBM4 bit supply expected to significantly increase in 2026, accounting for 30% in J.P. Morgan's forecast. The firm believes that by 2027, HBM4 and HBM4E combined will account for over 70% of the total bit supply. As HBM transitions to future generations of products HBM4E/HBM5, the increasing trade loss rate further exacerbates the supply-demand tension in the Industry. The firm predicts that the total addressable market (TAM) will grow over 70% year-on-year in 2026, comprising 45% of the total DRAM TAM and 10% of total bit demand. The launch of the Vera Rubin GPU (with a capacity of 1024GB, four times that of the Rubin GPU) in 2027 will become a major growth driver.
On the demand side: AI chips and sovereign AI drive the dual momentum.The demand for HBM bits will accelerate again in 2027 after slowing down in 2026, with the core drivers being the Vera Rubin GPU and AMD MI400 (432GB HBM). From 2024 to 2027, the compound annual growth rate (CAGR) of bit demand from ASIC, NVIDIA, and AMD exceeds 50%, with NVIDIA accounting for more than 60% of the bit share from 2025 to 2027, expected to dominate overall demand growth. In the ASIC field, it is anticipated $Alphabet-C (GOOG.US)$ TPU will become a major driving force, expected to account for over 50% of total ASIC demand by 2027.
The bank also believes that sovereign AI demand may become a key new variable in the market. Sovereign artificial intelligence demand is becoming a major structural driving force, with countries/markets competing to build national AI infrastructure to ensure data sovereignty and security. Countries/markets are prioritizing artificial intelligence investments, procuring necessary hardware and infrastructure to enhance local competitiveness. Although the specific trade scales in different countries/markets vary, there are numerous noteworthy projects:
These include Saudi Arabia's plan to invest 10 billion dollars to procure 0.018 million NVIDIA Blackwell GPUs, South Korea launching a 100 trillion won sovereign AI plan to secure 0.05 million GPUs, and the United Kingdom, France, and other countries promoting the construction of national-level AI computing infrastructure. This type of demand is spreading from hyperscale cloud service providers to sovereign markets, further reinforcing the growth logic of HBM.
Pricing and Costs: HBM4 carries a significant premium, with logic chips as the cost focus.Recent discussions in the market surrounding HBM pricing outlook stem from Samsung's aggressive pricing strategy to capture market share in HBM3E and HBM4. The bank's basic assumption is that the price discounts offered by suppliers must at least match the reductions in per-bit costs, with this ratio for all generational products (including HBM3E 12Hi) being about 6-7% annually.
For HBM4, pricing will vary based on logic chip costs and target gross margins. Given the higher chip loss (the gross margin curve for high-end product logic chips may be similar to that of low-end products, namely lower gross margins), it is expected that HBM4 will carry a 30-40% price premium over HBM3E 12Hi to compensate for costs.
The cost of logic chips is relatively high. It is stated that aside from specification upgrades and differences in mainstream packaging solutions, the procurement strategy for logic chips is a key differentiating factor in memory manufacturers' HBM4 product strategy. Memory manufacturers are balancing costs and profits with different strategies targeting key customers. It is estimated that the wafer cost for 4nm logic chips is around $13-14k per piece, for 12nm around $9-10k per piece, with each logic chip costing $100-140. The cost of a single Rubin GPU system (with 8 HBM cubes) is between $1000-1400.
Market landscape: SK Hynix leads, while Micron expands its share from a low base.Due to delays in HBM certification by Samsung, it is expected that Samsung's market share in the HBM sector will decline, and based on $Micron Technology (MU.US)$ actively expanding production capacity in Taiwan and Singapore, this market share is likely to be captured by Micron before 2027.
Micron's Q3 FY2025 performance shows a quarter-on-quarter revenue increase of 50% in HBM, with a quarterly revenue running rate reaching $1.5 billion. Furthermore, it is expected that in the August quarter, Micron's 12Hi products will achieve a "bit crossover," indicating that product output has reached a critical threshold, which may support its higher revenue-to-capacity conversion trend compared to Samsung in the short term.
Entering 2026, due to the slower effective capacity building compared to Samsung and Micron, it is anticipated that SK Hynix's revenue share will slightly decline, while Micron's market share growth will surpass its peers. Regarding the HBM4 sixth-generation products, it is expected that SK Hynix's market share will remain leading at 60% or higher. According to JPMorgan's forecast, the HBM4 bit crossover is expected to occur in Q4 2026, while the HBM3E 12Hi bit crossover is forecasted for Q2 2025, and increasing demand for the Rubin GPU may bring additional bullish factors.
Industry impact: HBM drives long-cycle upturns in DRAM.HBM is driving the DRAM Industry into a 5-year upward cycle, accounting for 19% of DRAM revenue in 2024, and is expected to account for 56% by 2030. The compound annual growth rate of DRAM average selling price (ASP) from 2025 to 2030 is 3%, higher than historical cycles, mainly driven by the increase in HBM sales proportion. The capital expenditures of the three major manufacturers for DRAM continue to grow, focusing on infrastructure in 2025, with equipment expenditure accelerating after 2026 as capacity increases.
The bank expects that HBM capital expenditures (capex) will continue to rise, but the growth rate will slow down. Many investors consulted have questioned the possibility of a slowdown in HBM capital expenditures, and the bank also sees no signs of a slowdown, as all memory manufacturers allocate most of their capital expenditures to expand capacity to meet the growing demand for HBM.
Morgan Stanley still considers SK Hynix and $Micron Technology (MU.US)$as the preferred symbol in the global memory field. The bank stated that based on equipment delivery and supply chain preparation timelines, negotiations for HBM orders with NVIDIA for 2026 need to be finalized in the next 1-2 months, which is expected to provide clear guidance for DRAM/HBM supply and demand in 2026. Related Stocks may continue to rise, thus maintaining a positive outlook on the long-term growth of HBM. |
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