General DRAM Profitability Surpasses HBM, Why?

Holtec directly mentioned the uncertainty of data center development as the reason for halting its IPO, adding to market anxiety.

The market is already aware of this growth rate gap, which is affecting each company's stock price volatility.

This phenomenon is temporary due to the slowdown in AI model development, and fundamental demand for HBM, a key component of AI, remains solid.

HBM supply for Google's TPUs and NVIDIA's GPUs is essential for the growth of the AI market, and continuous demand is expected.

Market consensus is forming that next year's HBM prices will increase by at least 50% to up to 100% compared to this year.

For memory manufacturers to continue HBM production, it is essential to secure higher margins than general DRAM.

Major customers such as NVIDIA and Google are in a structure where they have no choice but to accept price increases to ensure smooth HBM supply.

The main basis of the report is the forecast that unmet demand from this year will carry over to next year, making semiconductor supply and demand tighter next year than this year.

The increase in customers signing long-term agreements (LTAs) was also analyzed as a key factor enhancing supply-demand visibility.

At the Citi Conference, the possibility was raised that this goal could be achieved earlier than expected or even exceeded.

This expansion of LTA proportion is expected to enhance semiconductor supply-demand visibility and positively impact next year's earnings outlook.

When wafers are used for HBM production, a trade-off occurs where general DRAM production decreases.

As HBM advances from 3 to 3E and then to 4, the ratio of general DRAM reduction per HBM unit may expand from 1:3 to 1:4.

This expansion of HBM proportion accelerates the deterioration of general DRAM supply and demand, and competitors such as China's ChangXin Memory (CXMT) must also sacrifice general DRAM production capacity to handle HBM volumes.

With annual revenue of about 30 trillion won, it is currently in an operating loss of 3-4 trillion won, and it is analyzed that revenue is unlikely to surge to 50-60 trillion won in the short term.

However, if business competitiveness becomes visible, there is potential for multiple improvement, and securing large customers such as Qualcomm and AMD is considered a key condition for stock re-rating.

There is a trend of integrating memory control functions that manage data communication between GPU and HBM into the base die at the bottom of HBM.

Samsung Electronics produces this base die in-house, but SK Hynix relies on TSMC, which can serve as a long-term competitive advantage for Samsung Electronics.

As HBM production increases, demand for base die is expected to rise, and Samsung Foundry's 4nm capacity utilization is expected to increase, and with the introduction of next-generation HBM 5, the importance of fine processes for base die is expected to grow further.

If Samsung Life Insurance and Samsung Fire & Marine Insurance hold more than 10% of Samsung Electronics shares, there may be a need to sell shares, and buying and retiring preferred shares without voting rights instead of common shares is being discussed as an alternative.

It is known that various shareholder return measures including buybacks and dividends are currently under review.

Depending on Micron's earnings results, semiconductor stocks may break out of the box range and rise, or they may become trapped in the box range again.

Micron's sustained margin maintenance can be a key basis for PER (price-earnings ratio) re-evaluation (upward to 8-9 times).

In this earnings announcement, the key will be to determine whether such high margin rates are temporary or a 'new normal' based on AI demand.

In particular, whether long-term agreement (LTA) revenue is updated will serve as a very important indicator for bullish investors.

Whether GPM reaches 86% is as important as operating profit size or EPS, and can significantly affect future stock price trends.

Currently, the market shows a box range pattern moving slowly, repeating ups and downs in a staircase rather than a straight surge.

If large-cap stocks such as Samsung Electronics and SK Hynix remain in the box range, it can create an environment where it is difficult to profit from other stocks.

Institutional investors adopt a strategy of holding large-cap stocks as a base to defend market returns, and use a 'quick rotation' strategy to quickly move funds to flexible sectors such as transformers and materials/parts/equipment to outperform the market.

With Samsung Electronics and SK Hynix moving around 5%, the return game among institutional investors is intensifying.

To increase returns, funds are quickly moving to flexible stocks (materials/parts/equipment, etc.), and it is more likely to generate profits by targeting early turnaround stages or the first or second day when volume picks up, rather than stocks that have already risen a lot.

Intekplus, a vision inspection and test equipment company, has major customers such as Intel and Samsung.

The company recorded a loss until Q3, but in Q4, operating profit of 60 billion won is expected, and it is anticipated to achieve an earnings turnaround.

Currently, order backlog is estimated to be close to 120 billion won to 200 billion won, and next year's earnings growth is expected, and a turnaround with a margin rate of around 30% can be a strong driving force for stock price increase.