Samsung is weighing a meaningful adjustment to its semiconductor production, reportedly considering a shift away from High Bandwidth Memory (HBM) and toward standard Dynamic Random-Access Memory (DRAM) amid escalating component costs. The move,first reported by DigiTimes and DealSite Korea,reflects the volatile economics of the memory market and the growing profitability of DRAM,especially DDR5,as demand surges from data centers and AI applications. This potential realignment highlights the strategic challenges facing the world’s largest memory chip maker as it navigates intense competition with SK hynix and evolving consumer technologies.
Samsung is reportedly considering a shift in its production strategy, potentially reallocating resources from High Bandwidth Memory (HBM) to standard DRAM production amid rising prices for the latter. This move comes as the cost of components like DDR5 memory continues to climb, even approaching the price of high-end graphics cards and processors.
According to reports from DigiTimes and DealSite Korea (which has since removed its original publication), Samsung is closely monitoring the increasing profitability of standard DRAM. The company is evaluating the possibility of converting 30 to 40 percent of its HBM3E production lines to DRAM production as early as 2026.
The potential shift is tied to the different manufacturing processes used for each type of memory. HBM3E utilizes Samsung’s 1a DRAM node – its fourth-generation 10nm lithography – while standard DRAM, including DDR5, LPDDR5X, and GDDR7, leverages the newer 1b DRAM node. Adjustments to production lines would be necessary, but Samsung appears willing to invest in the change, potentially adding up to 80,000 wafers per month in 1b DRAM capacity. This move underscores the dynamic nature of the semiconductor industry and the constant need to adapt to market conditions.
Currently, Samsung reportedly achieves a gross margin of around 30 percent with its HBM3E production, a figure expected to decline as HBM4 becomes more prevalent. However, with DRAM prices surging, the company believes it could potentially reach a 60 percent gross margin on DDR5, making it a more attractive business opportunity. The anticipated increase in profitability is seen as a strategic move to gain ground on its primary competitor, SK hynix.
Internal sources suggest Samsung is under pressure to improve its financial performance relative to SK hynix. In 2024, Samsung’s electronics division reported a profit of $10.29 billion, compared to $15.99 billion for SK hynix. Forecasts for 2025 estimate approximately $16 billion for Samsung and $29 billion for SK hynix, widening the gap between the two companies. This competitive pressure is likely fueling the consideration of a production shift.
While Samsung is evaluating increased DRAM production, including DDR5, it’s not expected to translate into lower prices for consumers. The company’s primary motivation appears to be maximizing profits and strengthening its position against SK hynix, meaning 2026 may not offer much relief for consumers seeking affordable memory. (Source: Jukan on X)
