It is reported that Nvidia has paid hundreds of millions of dollars in advance to SK Hynix and Micron to ensure a stable supply of High Bandwidth Memory (HBM). Recently, Samsung Electronics completed product testing and signed an HBM product supply contract with Nvidia.
According to industry sources cited by Chosun Biz, SK Hynix, and Micron each received between KRW700 billion and KRW1 trillion (approximately US$540 million to US$770 million) in advance payments from Nvidia for the supply of advanced memory products. Although the details are not disclosed, the industry believes this is a measure by Nvidia to secure the supply of HBM3e for its new GPU products in 2024.
It is rare for customers to make large-scale advance payments to memory suppliers. However, due to the rapidly increasing demand in the HBM market, Nvidia plans to ensure a stable HBM source through proactive investment. For memory suppliers that experienced significant losses in 2023, requesting similar advance payment schemes can help with finances and reduce investment risks associated with HBM.
Despite the overall shortage in the HBM market, memory suppliers still face significant investment burdens. Improving the cost and yield of Through-Silicon Via (TSV) processes is the most challenging task. As HBM continues to evolve, process and equipment requirements change. Suppliers adopt different solutions to address issues such as heat dissipation. Therefore, massive investments in technology development are required, and Nvidia's support in the form of substantial advance payment is expected to drive HBM investments for memory suppliers.
It is also reported that Samsung recently completed product testing for HBM3 and HBM3e and signed a supply contract with Nvidia. However, analysts point out that compared to SK Hynix, which uses 1b nanometer (fifth-generation 10-nanometer) DRAM in Nvidia product testing, Samsung uses 1a nanometer (fourth-generation 10-nanometer) to produce HBM3e. Additional processes may be necessary to enhance performance, leading to higher costs.
