IC Equipment Makers Poised to Capitalize on the HBM Memory Boom

High Bandwidth Memory (HBM) is the hottest product in the memory market today, with booming demand for the fast-performing DRAM helping to propel the industry’s recovery in Q4. However, HBM is also in a severe shortage, as leading memory suppliers Samsung and Micron continue to ramp up production to catch up with top HBM maker SK Hynix.

As memory makers rush to increase output, they are turning to semiconductor equipment suppliers to provide the advanced chipmaking and packaging capabilities required for HBM manufacturing. With its recent product announcements, Applied Materials has positioned itself successfully to support the HBM production ramp.

What’s Driving Exponential HBM Demand Growth?

Global HBM bit demand is set to rise nearly by a factor of eight from 2022 through 2027, according to one market watcher. Driving this demand growth is the proliferation of AI processing in data centers, with worldwide AI server shipments set to surge by about 40% in 2023. Although the AI server market was already expanding at a rapid pace, the arrival of OpenAI’s ChatGPT has sent demand growth into hyperdrive in 2023 as companies vie to capitalize on the next big AI trend.

HBM demand growth is being further bolstered as top AI accelerator chip suppliers enhance their devices to support the high-performance memory type, with AI GPU market leader NVIDIA announcing a version of its Grace Hopper AI super chip with support for HBM3e, an even higher-performing variant of HBM.

HBM market leader SK Hynix has been employing cutting-edge extreme ultraviolet (EUV) process technology to produce its most advanced DRAM chips. However, EUV chip lithography equipment is extremely expensive, costing from $160 million to $200 million for a single machine. Applied Materials in February announced a new technology called pattern shaping, which reduces the number of steps required to conduct EUV lithography.

Pattern shaping could cut the use of EUV lithography by as much as 50%, reducing the need to buy as many expensive machines. For memory suppliers, pattern shaping will allow the ramp-up of HBM production using advanced geometries at a reduced cost.

Applied Materials is also leveraging its strength in advanced packaging technology to support HBM production. To attain high bandwidth, HBM utilizes stacks of multiple semiconductor dice, requiring more sophisticated packaging solutions. In its fiscal Q3 earnings call, the company noted its micro-bump and Through Silicon Via packaging technologies will support multiple generations of HBM.

Buyers Should Brace For Sourcing Challenges in H1 2024

With High bandwidth memory remains in critically short supply, with pricing at extremely high levels, buyers will face challenges sourcing parts. Commodity IQ forecasts that HBM pricing and lead times will continue to rise through Q2 2024. However, increasing production will help balance out the supply and demand equation, potentially providing some relief for buyers as soon as H2 2024.

Efforts by Applied Materials and others to provide the underlying technology to ramp up HBM production will help with purchasing challenges next late next year.