Samsung Electronics Co. and SK hynix Inc., the world’s two biggest memory chipmakers, are planning to capitalize on the market downturn by focusing on next-generation products, including high-value items such as Double Data Rate 5 (DDR5) and High Bandwidth Memory 3 (HBM3).

Samsung Electronics is cutting production mainly on DDR4, which has relatively low prices and ample inventory. In its first-quarter earnings call last month, the company said it will actively respond to the growing demand for DDR5 in line with new server CPUs and expanding demand for artificial intelligence (AI) systems, while actively responding to the demand for LPDDR5X for mobile high-end products.

SK hynix is focusing on HBM, which is in high demand due to the rise of generative AI worldwide. HBM is a 3D stacked DRAM solution for fast data processing and high-performance applications.

Demand for high-performance memory chips continues despite the overall market slump in the semiconductor industry.

According to DRAMeXchange, a research division of TrendForce, on Tuesday, the average fixed transaction price of high-value products, such as LPDDR5, remains weak but the price decline has slowed compared with the general-purpose LPDDR4 chips.

The average fixed transaction price for 12 gigabytes (GB) of LPDDR5 for mobile devices was $23.7 at the end of April, down 17 percent from the first quarter. This follows an 18.2 percent quarter-over-quarter decline in the fourth quarter of last year and a 17.9 percent decline in the first quarter of this year. The price decline is still ongoing, but the pace has slowed slightly.

LPDDR is the main type of DRAM used in smartphones and tablets. LPDDR5 is the newest standard for LPDDR. On the other hand, LPDDR4X 4GB, which is the most popular LPDDR4 specification, saw a significant price drop in the second quarter of this year.

The industry believes that there has been some recovery in demand, mainly for high-value semiconductors. The current DRAM market is rapidly pivoting from DDR4 to DDR5.

According to Omdia research, DDR5 is expected to account for 12 percent of the DRAM market this year, more than quadrupling from 3 percent last year. A similar phenomenon is occurring in the market for server and mobile DRAM chips.

By: DocMemory
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