SK Hynix announces plan to prioritize general-purpose DDR5 DRAM production over high-bandwidth memory (HBM), shifting away from HBM focus despite recent strong profitability in that segment.
SK Hynix is shifting its production focus back to general-purpose DRAM, such as DDR5, after securing record revenue from high-bandwidth memory (HBM). HBM has driven profits for Samsung, Micron, and SK Hynix over the past several months due to surging demand from AI firms, but now that these companies have established strong positions in the HBM segment, they are returning attention to general-purpose DRAM where supply shortages remain severe.
According to industry reports, HBM now accounts for 40% of SK Hynix's total revenue. Rather than aggressively expand capacity, the company is adjusting its resource allocation to capitalize on higher profit margins in the general-purpose DRAM market. SK Hynix is delaying the conversion of its 5th-generation HBM (HBM3E) production lines to HBM4, a shift originally scheduled but no longer urgent given the company's established foothold in HBM. HBM4 remains a key product for AI chips, with Hynix serving as the main supplier for NVIDIA's Rubin platform, and the industry sees no immediate need to rush the transition to HBM4 and HBM4E products.
The general-purpose DRAM segment has experienced far more severe shortages than the HBM market—a shortage created when manufacturers diverted focus to HBM and AI-focused solutions. Now that HBM production has peaked, producers want to recapture profits in this segment. SK Hynix has reported that DRAM average selling prices have risen beyond 60%, and the company recently secured a long-term Microsoft DDR5 supply contract reflecting renewed focus on general-purpose DRAM solutions. Profit margins in the general-purpose DRAM segment are estimated to reach 2x by the end of the year, while Samsung is already capitalizing on these margins.
Increased general-purpose DRAM production will likely improve RAM availability in OEM, ODM, and server markets, though it may not significantly lower prices. Even as SK Hynix returns to general-purpose DRAM, the company will retain a strong share in the HBM segment. However, if HBM demand accelerates again, manufacturers may once again shift resources toward the more lucrative opportunities, perpetuating a cycle that prioritizes producer profits over market stability.