SK Hynix HBM4 Chips to Generate $600M-$1.5B in 2026

A recent research report reveals that SK Hynix's HBM4 chips are anticipated to generate annual revenues of $600 million to $1.5 billion starting in 2026. The report also offers insights into other industry leaders, assigning "Buy" ratings to TSMC and Vanguard International Semiconductor (VIS), while maintaining a "Neutral" rating for ASE Technology (ASE).

In a financial update last December, Micron CEO Sanjay Mehrotra announced that their 2024 HBM production capacity is fully booked. The HBM3E, which will enter mass production in early 2024, is expected to contribute several hundred million dollars in revenue for the fiscal year. Micron's COO Manish Bhatia also projected in May that their HBM business could expand to several billion dollars by the 2025 fiscal year, with most 2025 supply agreements already finalized.

SK Hynix, a prominent player in the HBM market, reported in February that their HBM production capacity for the year is fully committed. To sustain its market leadership, SK Hynix is enhancing its HBM technology while significantly increasing production capacity. Kwon Jae-soon, a senior executive at SK Hynix, recently disclosed that their HBM3E yield is nearing 80%, with notable improvements in production efficiency. HBM is expected to account for a double-digit percentage of SK Hynix's overall DRAM sales in 2024, with tight supply conditions persisting into 2025.

The growing demand from the AI and high-performance computing (HPC) sectors is driving the focus on next-generation HBM4 memory, featuring a 2048-bit interface. SK Hynix, Micron, and Samsung all plan to commence mass production of HBM4 in 2026, with SK Hynix likely to maintain a market lead. According to UBS's latest report, SK Hynix's HBM4 chips will contribute between $600 million and $1.5 billion in annual revenue starting from 2026.

For TSMC, UBS forecasts a long-term gross margin of over 53%. With increased regional supply chain flexibility, TSMC aims to offer higher-value products to manage rising costs. In the second half of the year, as capacity utilization stabilizes, their gross margin is expected to rise slightly from 52% in Q2 to 52.3%. Annual sales are anticipated to grow by 20-25%, with semiconductor revenue (excluding memory chips) projected to increase by 10% year-over-year. For advanced processes, N2 is expected to reach corporate average gross margin faster than N3 due to its higher speed, diverse product base, and higher starting prices.

ASE Technology is actively engaging with clients in advanced packaging, allocating $1.4-1.5 billion for semiconductor equipment capital expenditure in 2024, with a focus on advanced packaging, testing, and R&D. The advanced packaging capacity is expected to achieve single-digit growth in IC ATM revenue in 2024.

VIS anticipates an 18% quarter-over-quarter increase in wafer shipments for Q2, although ASP is expected to decline by 3% quarter-over-quarter. Q3 revenue is forecasted to grow by 8% quarter-over-quarter. Stable demand for power management ICs (PMIC) and strong bookings from mobile chip clients, likely including Qualcomm, are driving this growth. Additionally, the recovery in automotive and industrial demand in the second half of the year is expected to boost capacity utilization and gross margins.