Samsung Electronics and SK hynix have been focusing on expanding the DDR5 memory market as a key to rebounding from their massive losses in the first quarter of this year. With most customers hesitant to buy DDR4 memory, a previous-generation product, analysts say that increasing the supply of DDR5 memory can expedite the chipmakers’ exit from a semiconductor market slump.

According to sources in the semiconductor industry on May 1, among the three major players in the market -- Samsung Electronics, SK hynix, and Micron -- SK hynix currently accounts for most of the supply of DDR5 RAM for servers. Samsung Electronics is expected to start supplying DDR5 DRAM for servers from the end of the second quarter of this year, while Micron is not yet ready.

DDR5 DRAM is the latest DRAM specification announced by the Joint Electron Device Engineering Council (JEDEC) in July 2020. It has twice the performance of DDR4 DRAM currently in widespread use. In the server memory market, which is the largest source of revenue for memory semiconductor makers, DDR4 DRAM still accounts for the majority of the memory market, so DDR5 DRAM is seeing high demand for replacement. Intel, the dominant number one player in the server central processing unit (CPU) market, introduced a DDR5 DRAM-capable Sapphire Rapids CPU in the first quarter, and DDR5 DRAM is on a gradual rise in the server memory market.

The point is that supply and demand are still small. The memory semiconductor industry hasn’t been able to churn out enough DDR5-compliant RAM, and large IT companies were hesitant to invest in new IT infrastructure until the first quarter of this year due to uncertainties. However, since the second half of this year, chipmakers have had much anticipation for favorable factorssuch as the reopening of China, the recovery of the global consumer market, the resumption of infrastructure investment by IT companies, and the full-scale construction of artificial intelligence (AI) models such as ChatGPT.

As the DDR5 market has entered a period of bloom, SK hynix, the number-two play in the RAM market, has gained an early advantage. Working closely with Intel, the Korean chipmaker became the first in the semiconductor industry to have its 10-nanometer fourth-generation (1a) DDR5 server RAM certified. The advantage of this certification is that the RAM can be paired with Intel CPUs in the server market so its demand can be expanded.

For Samsung Electronics, its initial move went awry. First of all, Samsung Electronics lagged behind SK hynix in mass production of 10-nanometer DDR5 DRAM, which hurt its pride as the largest DRAM maker in the world. This also means that SK hynix has been leading Samsung Electronics in the 10-nanometer DDR5 DRAM market in the early stage. Securities market analysts expect Samsung Electronics to be able to mass-produce and supply 10-nanometer DDR5 DRAM beginning from the end of the second quarter of 2023.

Some analysts believe that Samsung’s delayed production of DDR5 DRAM was needed to secure the stability of its extreme ultraviolet (EUV) lithography process in the medium to long term. EUV lithography has been used primarily in system semiconductor production processes, but it has become an industry standard since Samsung Electronics applied it to its 10-nanometer DRAM production process. Once the process is stabilized, Samsung’s DDR5 DRAM production capacity will surge, many experts say.

According to market research firm OMDIA, DDR5 DRAM will account for 12 percent of the DRAM market this year, up from three percent in 2022. They are expected to grow to 27 percent in 2024, overtaking DDR4 (23 percent).

By: DocMemory
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