The DRAM industry moves very fast. Samsung is already preparing to expand its fabrication capacity, heralding big changes down the road. A third new plant, to be located in Pyeongtaek, South Korea, is expected to be completed in 2028. It will relieve pressure on fast-growing demand for DRAM, in particular for AI data centers. The insatiable demand for DRAM, particularly as it relates to graphics processing units (GPUs) and other accelerators, is at unprecedented levels. With these questions looming over the industry, compounded by ongoing challenges like economic uncertainty and production reluctance, insiders expect a rocky future.
In recent years, the DRAM market has witnessed fluctuations that have led companies like Samsung and Micron to adjust their production strategies. Notably, the soaring demand for advanced memory solutions, particularly for AI applications, has been a key factor in accelerating innovation in chip stacking technologies. Continuing economic headwinds, most notably a recession in the DRAM industry, have impacted production as well. To some extent, major players have reacted as one would expect, with cuts up to 50% or more. Even with these failures under the bridge, industry titans are still on the lookout for new ways to satisfy gargantuan demand for compute power.
Samsung’s Strategic Move
In addition, Samsung announced plans to invest in a second advanced logic plant in Pyeongtaek. This step intelligently anticipates profound changes that transforming the DRAM marketplace will require. The new facility will expand Samsung’s production of high-bandwidth memory (HBM). This form of memory is foundational for driving today’s most advanced computing applications. The latter has already been successfully demonstrated by the company in a stacked configuration of 16 DRAM dies. They were able to do this through complex hybrid bonding technology.
The next HBM4 standard adds support for 16 die stacking of DRAM dies. This breakthrough in memory technology clears the path to unlock the future’s demands. Samsung has already signaled its own ambitions to exceed 16 dies. 20 stacked dies can’t be far off now! This kind of innovation is essential. For example, in addition to eight HBM chips, each chip has 12 DRAM dies, helping power their AI-enhanced data centers.
“Relief will come from a combination of incremental capacity expansions by existing DRAM leaders, yield improvements in advanced packaging, and a broader diversification of supply chains,” – Shawn DuBravac
Market Dynamics and Production Challenges
The DRAM market is experiencing its own set of challenges that make boosting production a thorny endeavor. It’s important to remember that costs are real. Building new fabrication plants (fabs) is extremely costly, often over $15 billion. As a consequence, businesses are afraid to invest in more manufacturing capacity. The reluctance to expand now is further aggravated by the current economic climate. A long-running cyclical recession in the DRAM industry has taken its toll on production, as shown.
Even with these hurdles, cautious optimism lays over the long-term prospects of the memory market. In fact, almost 2,000 new data centers are projected or being built already. This multi-state expansion represents a major investment of $3.3 billion in servers, data storage and networking equipment. This increase is a clear indication of the continuing need for compute power and memory resources that are essential to enabling data-intensive applications.
“In general, economists find that prices come down much more slowly and reluctantly than they go up. DRAM today is unlikely to be an exception to this general observation, especially given the insatiable demand for compute,” – Mina Kim
Innovation and Future Prospects
According to experts, restoring supply in DRAM market will take a multi-pronged effort. Advances in both memory technology and chip design will be key to reducing supply burdens. As Mina Kim noted, “There are two ways to address supply issues with DRAM: with innovation or with building more fabs.” Many companies need the latest and greatest technology to be competitive, but there are risks in making large bets on new manufacturing plants.
Samsung’s progress with its hybrid bonding technology could open the door for others to further innovate their own exhibits’ offerings. Firms are doggedly searching for new, innovative methodologies and techniques to make their memory products better. As they push forward, competition in the sector will continue to increase. As a result, these investments have the potential to unlock breakthrough discoveries that would dramatically improve production efficiency and yield rates.
Companies like Micron are already making big moves. They made their lighting production targets two years in advance, a proof-of-concept for the innovation-fueled growth potential here. As memory requirements escalate due to AI and other compute-intensive applications, the urgency to expand production will likely become more pronounced.