The continuous surge in generative AI applications is driving strong demand for High Bandwidth Memory (HBM), significantly benefiting Japanese suppliers of materials and equipment associated with HBM production. This trend is prompting these suppliers to make significant investments in expanding their production capacity.
Reports from Nikkei and Nikkan Kogyo Shimbun indicated that Samsung Electronics is actively catching up to challenge SK Hynix's lead in the HBM market. This competitive landscape among memory chipmakers is proving advantageous for suppliers of HBM-related materials and equipment.
SK Hynix took the lead to achieve profitability in the fourth quarter of 2023, largely attributed to the rising sales of HBM for AI chips fueled by the increasing demand for generative AI. As HBM is a high-margin product, its sales growth is significantly enhancing the company's overall revenue and profit performance.
SK Hynix is gearing up for mass production of a new HBM product featuring eight layers of stacked DRAM and has also started delivering samples of 12-layer variants to its customers. Concurrently, Samsung and Micron are also expediting the development of 12-layer HBM.
In contrast to conventional DRAM, HBM necessitates distinct 3D structure routing technology, packaging materials with superior heat dissipation properties, and more precision wafer grinding technology. The mastery of these technologies relies heavily on the support and expertise of Japanese companies.
Core patents for HBM packaging equipment
Towa president, Hirokazu Okada, has highlighted a rapid surge in demand for HBM resin compression molding packaging equipment since the summer of 2023. During fiscal 2023 (April 2023-March 2024), the company successfully sold 22 units to two major South Korean memory chip manufacturers. Okada emphasized Towa's possession of core patents in the technology essential for this equipment.
Okada predicted that large-scale production of HBM is unlikely to commence until around 2025, signaling that the business opportunities for providers of HBM-related packaging equipment will only start to materialize around that time. Furthermore, SK Hynix's CFO, Kim Woo-hyun, estimated a sustained annual growth rate of 60% for the HBM market.
Alongside Towa, wafer grinding and cutting equipment manufacturer Disoc, and testing equipment specialist Advantest are also experiencing unprecedentedly high valuations amidst the HBM boom.
Resonac has unveiled plans to invest an additional JPY15 billion (US$96.82 million) to construct a new factory at its domestic manufacturing complex, aimed at expanding the production of related materials to cater to the escalating demand for HBM and other high-performance AI chips. This expansion will boost production capacity by 3.5 to 5 times, with gradual production set to start in fiscal 2024.
These materials include Non-Conductive Film (NCF) for HBM and Thermal Interface Material (TIM) crucial for heat dissipation in high-performance AI chips. NCF production will be scaled up at the Goi Plant in Chiba Prefecture, while TIM production will be expanded at the Sakuragawa plant within the Yamazaki base in Ibaraki Prefecture.
Resonac cited a research firm's report projecting that the AI chip market in 2027 will grow to 2.7 times its size in 2022. Consequently, the expansion aims to cater to this burgeoning demand and fortify the company's existing market position.
