Samsung secures $749 billion HBM supply deal with Nvidia while SK Hynix preserves inventory optionality.

SK Hynix, the world's second-largest memory maker behind Samsung, recently turned down a 500 billion won ($374 million) advance payment from an unnamed AI accelerator company to secure a dedicated high-bandwidth memory (HBM) production line. Instead, the South Korean chipmaker has committed to supplying over 1 trillion won ($749 billion) worth of HBM products to Nvidia, the leader in AI chip development. This decision underscores SK Hynix's strong commitment to Nvidia, which continues to dominate the AI chip market.

HBM has become a critical commodity as demand for AI chips continues to surge. The memory type is essential in AI accelerators and high-performance computing, and Nvidia's AI chips, which are crucial in data centers and AI applications, heavily rely on HBM, making memory suppliers like SK Hynix key players in the supply chain. Samsung and SK Hynix, the two largest DRAM producers globally, are both expanding their HBM production capabilities to meet this demand. Samsung is currently building a new production line for DRAM and HBM at its Pyeongtaek facility, which will supply AI accelerator chips for companies like AMD, while SK Hynix recently teamed up with TSMC to advance HBM development.

The global DRAM market, which includes HBM, is expected to double to $175 billion this year, driven largely by the growth of AI and data center technologies. Samsung's capital expenditure for DRAM is expected to rise by 9.2 percent in 2024, reaching $9.5 billion, while SK Hynix is tripling its DRAM spending to $7.1 billion this year. HBM prices, currently five to six times higher than standard DRAM products, are expected to further boost profitability for both companies as they continue to benefit from the skyrocketing AI market.