Samsung Electronics (005930.KS) said it plans to supply high-bandwidth memory (HBM) and commodity DRAM in a balanced manner, as profitability is expected to rise for both products following a recent surge in DRAM margins.
"Given the HBM negotiation environment, where the supply-demand gap continues to widen, we expect the profitability gap with commodity DRAM to narrow significantly next year," Samsung Electronics said during a conference call on Thursday to announce its first-quarter earnings. "If operations are skewed toward commodity DRAM, supply constraints could arise. We believe a balanced supply between the two products is necessary to generate sustainable revenue."
With commodity DRAM profitability recently improving, manufacturers have been considering expanding production of commodity DRAM over HBM. While HBM is contracted on an annual basis, commodity DRAM is contracted on a quarterly basis, allowing price increases to be reflected sooner. However, Samsung's analysis is that if supply becomes relatively concentrated on commodity DRAM, HBM shortages will intensify, enabling HBM profitability to catch up.
