The Chip Insider®– Memories: How Korea and SK hynix rose to dominance in HBM

Summary: Memories: How Korea and SK hynix rose to dominance in HBM

The semiconductor market for memories has a 7-decade history of severe boom-bust cycles, characterized by intense price wars in an environment of pure competition. Most of this was for DRAM, which was invented by Robert Dennard in 1966 at IBM. IBM was the largest producer in those days, but even it could not make enough for itself... By the 1970s, semiconductor executives were joking that IBM really stood for IBM memories. It was like the Nvidia and the memory market today…

How Korea pushed Japan out: The early 1990s proved the key turning point for Korean memory makers. In 1990, Japan's memory makers led the market with almost 68% of the DRAM market… Japan made 3 strategic mistakes…

How HBM changed market dynamics:Until the advent of HBM, the memory market structure had been purely competitive with strict standards that ensured interoperability between manufacturers in any OEM system. These characteristics made it a commodity…

How HBM creates value downstream: The token economy is driven by price-per-token. Tokens are the commodity in this economy. So the revenue a data center can generate is constrained by how many tokens it can generate times their ASP…

How SK hynix captured the lead: ...SK hynix was early in the HBM game, having developed the world’s first HBM in 2013. The market uptake seemed small at the time… The fact that it got off to a slow start kept SK hynix and HBM in a virtual stealth mode. Remember, it was 2016, Intel’s board had rejected Paul Ottellini’s request to buy Nvidia, and most were still not taking Nvidia as a serious threat. SK hynix’s brilliance was… From its earliest days, HBM was never just another off-the-shelf memory commodity. SK hynix's strategic intention from the beginning was for HBM to … Ten years after HBM’s introduction… AI was taking off... At that point, SK hynix's competitors found it extremely difficult to move… To sum up, SK hynix’s superpowers are…

Competitive technologies to HBM: The advent of HBM has structurally altered the memory market by shielding chipmakers from wild swings in consumer and enterprise commodity demand for memory via… The surprising result has been that commodity market pricing has become more stable with an upward trend. The only question is if this will be the case in the long term… Essentially, memory is the South Korean version of Taiwan silicon-shield strategy. In this case it was a memory shield for Korea of national security importance. True, simply because AI chips are not viable without advanced HBM.

The status of memory semiconductors in the global landscape will continue to be critically important for the foreseeable future as it has in the past. I do not believe anything has changed in the importance of memory, since my father and I wrote this for the Scientific American January 1996 issue:

"The ability to store and process information in new ways has been essential to humankind's progress. From early Sumerian clay tokens through the Gutenberg printing press, the Dewey decimal system and, eventually, the semiconductor, information storage has been the catalyst for increasingly complex legal, political and societal systems. Modem science, too, is inextricably bound to information processing, with which it exists in a form of symbiosis. Scientific advances have enabled the storage, retrieval and processing of ever more information, which has, in turn, helped generate the insights needed for further advances. Over the past few decades, semiconductor electronics has become the driving force in this crucial endeavor, ushering in a remarkable epoch."

- Technology and Economics in the Semiconductor Industry, by G. Dan Hutcheson and Jerry D. Hutcheson

“Cost is important... Value is decisive.” — G. Dan Hutcheson