Prices for the latest high-bandwidth memory (HBM) could more than double next year amid the surge in artificial intelligence (AI) infrastructure investment, according to a forecast. As demand for HBM4 explodes ahead of the shipment of Nvidia's next-generation AI platform, production bottlenecks and the expansion of long-term agreements (LTAs) are combining to further strengthen memory makers' pricing power, analysts said.
Taiwan's DigiTimes reported on the 12th, citing multiple industry sources, that HBM4 prices are forecast to surge from about $2 per gigabit (Gb) in the second half of this year to $4-5 or more next year. HBM3E prices, currently at $1.5-1.6 per Gb, are also expected to rise in tandem. The world's three major memory makers—Samsung Electronics, SK hynix and Micron—are expected to finalize next year's HBM supply prices around the fourth quarter of this year.
Industry experts said a sharp price increase is inevitable as demand expands, with Nvidia's "Vera Rubin," which features HBM4, set to launch in the second half, while supply bottlenecks intensify. HBM manufacturing consumes about three times more wafer production capacity than double data rate (DDR) 5, a general-purpose DRAM. In particular, HBM4 has a total production cycle of four to six months, up to twice as long as DDR5's three to 3.5 months, and its initial yield is also low, creating even greater upward pressure on prices.
Against this backdrop, the expansion of LTAs and strategic customer agreements (SCAs) is deepening the supply shortage. Large AI customers are securing volumes by signing three- to five-year long-term contracts with memory makers to prepare for a prolonged supply shortage. The industry estimates these volumes will tie up 20-30% of general-purpose DRAM production capacity. On top of this, with HBM set to account for about 30% of total DRAM production capacity, analysts say roughly half of total production capacity could be allocated to large customers on a priority basis starting next year. Suppliers are strengthening their negotiating power by securing "post-settlement" clauses, under which they initially contract at a fixed price but receive additional payment equal to any price increase if market rates rise later.
The surge in DDR5 profitability is also cited as an unexpected variable driving price increases. As demand grows for DDR5 as a second-best option in place of the expensive and hard-to-find HBM, some suppliers' DDR5 profit margins exceeded 80% this year and are trending higher each quarter. DDR5 has a shorter production cycle than HBM4 and is easier to convert processes, making its short-term profitability high. As a result, Samsung Electronics and SK hynix are also reallocating some production capacity back to DDR5. DigiTimes analyzed that "if DDR profitability remains high, suppliers are likely to demand further HBM price increases to prove that converting general-purpose DRAM production lines to HBM makes sense."
While recent news that Meta is pursuing external leasing of AI computing resources raised concerns that it signals weakening demand, the industry consensus is that such interpretations are exaggerated. AI infrastructure remains in a supply shortage, with no clear signs of a slowdown through 2027, they said. Major cloud service providers are also preparing aggressive capital expenditure next year, so demand for HBM and DDR, as well as server memory modules (RDIMM) and enterprise solid-state drives (eSSD), is expected to continue rising. DigiTimes noted that "customers who have not secured long-term contracts could face the greatest risk," adding that "consumer electronics makers and small and mid-sized customers will face growing difficulty in securing volumes."
