Strong demand for AGI is driving an oversupply situation for high bandwidth memory (HBM), a technology whose widespread use in smartphones, personal computers and data centre servers has led to a significant increase in the price of dynamic random access memory (DRAM) products. For the first time in the past three months, DRAM prices have risen by 8 per cent.

As of May 2024, wholesale prices for DDR4 8Gb reached $2.10 per unit, while 4Gb products were priced at $1.62 per unit, both showing an approximately 8% increase from the previous period.

HBM, a critical component supplied primarily to NVIDIA (stock code: NVDA) for its generative AI GPUs, has seen strong demand directly driving up DRAM market prices. Some electronics distributors have noted severe shortages in HBM supply, unable to meet market demands. Meanwhile, to increase HBM supply, some companies have reduced traditional DRAM production, thus pushing up prices for traditional DRAM.

Against this backdrop, Micron Technology (stock code: MU) is expanding its HBM-related R&D facilities at its headquarters in Boise, Idaho, USA, including production and validation lines, and considering establishing new HBM production capacity in Malaysia. Additionally, Micron is expanding its HBM production base in Taichung, Taiwan, with a target to increase its HBM market share to 24%-26% by the end of 2025, approaching its market share level in the traditional DRAM market.

According to the World Semiconductor Trade Statistics (WSTS), sustained growth in global AI-related investments will significantly increase demand for memory and certain logic chips. Therefore, WSTS has raised its estimate for global semiconductor sales in 2024 to $611.23 billion, with a year-on-year growth rate of 16.0%, reaching a historical high. Furthermore, WSTS has also raised its estimate for global memory sales in 2024 to $163.153 billion, expecting a growth rate as high as 76.8%.