Samsung Pioneers Commercial HBM4 Shipments as Capacity Sells Out. 2027 to See Larger Memory Supply-Demand Gap

TradingKey - On April 29, Samsung Electronics released its first-quarter earnings report: quarterly revenue reached a record 133.9 trillion won, and operating profit surged 756% year-on-year to 57.23 trillion won, marking the strongest results in the company's history. Driven by the earnings performance, Samsung Electronics' shares in Korea briefly touched 230,000 won, setting a new intraday high.

This earnings call provided even more critical information. Samsung is highly optimistic about future memory demand, believing the supply-demand gap will widen further by 2027; furthermore, the advanced HBM4 process is expected to see a substantial expansion in supply in the second half of this year. Meanwhile, Samsung also pointed out a "profit inversion" among current products, where "legacy DRAM is more profitable than HBM," but stated it would not pivot significantly toward legacy DRAM.

DRAM Profits Unusually Exceed HBM; Samsung Plans to Defend HBM Position

Samsung management stated that profit margins for conventional DRAM are currently higher than those for HBM, citing differences in their pricing mechanisms. HBM pricing is locked in annually, whereas conventional DRAM prices are negotiated on a quarterly basis. As conventional DRAM prices are currently surging quarter-over-quarter, a margin inversion has occurred between the two.

Despite this, management noted they will not aggressively shift toward conventional DRAM for short-term profit, as "this could pose a constraint on the development of AI infrastructure itself." According to Samsung's forecasts, the profit margin gap between the two products is expected to narrow significantly by 2027, driven by the proliferation of inference services and AI agents.

Samsung Pioneers Commercial HBM4 Shipments, Securing H2 SSD Market

Given the market's intense focus on Samsung's future capacity, management stated that based solely on current booking demand, the supply-demand gap in 2027 will widen further compared to this year. The company emphasized that its current available supply is far from meeting customer demand, and Samsung's demand fulfillment rate is currently at an all-time low.

To address this, major hyperscalers, including Samsung, are shifting toward medium-to-long-term supply commitments. Samsung stated that it has been pursuing multi-year supply agreements, which differ from past supply contracts by offering a higher level of binding force.

Samsung will expand its capacity as much as possible. In terms of HBM products, the company announced that it has become the first in the world to start commercial shipments of HBM4. HBM4 is the latest technical standard to have entered the mass production stage to date, namely the sixth generation of high-bandwidth memory. HBM4 has become a standard feature for NVIDIA (NVDA) Vera Rubin platform and AMD MI450.

Samsung stated that its prepared HBM4 capacity has been fully booked and sold out, and Samsung's HBM4 supply is expected to achieve substantial expansion in the second half of the year. From the third quarter of this year, HBM4 sales are expected to exceed half of total HBM sales. Additionally, for the HBM4e product, which is more advanced than HBM4, Samsung will begin providing samples from the second quarter.

Beyond HBM, Samsung's other product lines are also prepared. Data center demand is currently extending from HBM to NAND as well. This is because the memory capacity requirements for running large language models are growing, and while HBM and DRAM costs are relatively high, NAND is more cost-effective. Samsung noted that this trend is driving demand for high-performance PCIe Gen 6 SSDs, and it is ready to secure a leading position in the early Gen 6 market in the second half of the year.