Major tech companies have stepped up their investment in artificial intelligence in 2024, with analysts expecting Samsung and SK hynix to see their operating margins exceed 40%. The two Korean manufacturers have decided to expand their DRAM segment, which promises to surpass the rest of the semiconductor industry thanks to the rapid growth of AI.
Image source: skhynix.com
Samsung will build a PH3 production line for DRAM and other components at its Pyeongtaek plant in Gyeonggi Province and suspend construction of a clean room for contract semiconductor manufacturing, the publication has learned. Korea Electronic Daily. The plant will produce DRAM chips for HBM memory, which will be installed on AMD AI accelerators. Samsung’s capital expenditure on DRAM excluding building construction costs will grow by 9.2% in 2024 to reach $9.5 billion, a record high since 2020. And in 2025, they are expected to increase even more, reaching $12 billion.
SK hynix was forced to cut production last year, and is now ready to more than triple its spending on the DRAM sector: in 2023, it was $2.3 billion, and in 2024 it could reach $7.1 billion. The global memory chip market is growing: the industry, which includes DRAM and NAND, is ready to show almost double growth this year to $175 billion – for comparison, the semiconductor manufacturing market, dominated by TSMC, will stop at $120.3 billion. In 2025, the memory chip market will exceed the $200 billion mark, of which DRAM will account for $162 billion.
Image source: samsung.com
Samsung and SK hynix are planning to invest billions of dollars in developing next-generation products, including Processing In Memory (PIM) technology and CXL (Computer Express Link) interface. Earlier this year, SK hynix received a tempting offer from an AI accelerator maker, who asked the Korean company to build a dedicated memory chip production line and promised to make an advance payment of more than 500 billion won ($372.41 million). But SK hynix was forced to reject the offer because it had already committed to supply 1 trillion won ($744.81 million) worth of products to Nvidia, the world leader in the AI accelerator segment.
This year, 13 of the largest tech companies in the US and China, including Google and Alibaba Group, plan to spend $226.2 billion on AI data centers, up 33.7% from 2023. In 2025, that figure will grow by an additional 13.4% to $256.6 billion. A significant portion of that budget will likely be spent on AI accelerators, meaning demand for DRAM will remain strong. Prices for HBM memory, which accounts for 26% of Samsung’s DRAM capacity and 28% of SK hynix’s, will be five to six times higher than DDR5 by the end of 2025, boosting both companies’ profitability. Samsung and SK hynix will have operating profit margins of over 40%.
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