JPMorgan has released an in-depth research report on the Asia-Pacific memory sector, focusing on the development trends of the High Bandwidth Memory (HBM) market and its profound impact on the industry. The report indicates that the HBM market has entered its fourth consecutive year of an upcycle starting from 2023, with this growth trajectory expected to persist until 2027. Driven by surging demand for Artificial Intelligence (AI) and High-Performance Computing (HPC), the importance of HBM technology is becoming increasingly prominent; its share in AI capital expenditure and revenue continues to rise, establishing it as a key force propelling growth in the memory sector. The report provides a detailed analysis of the supply and demand dynamics in the HBM market, projecting that the Total Addressable Market (TAM) for HBM will grow at a Compound Annual Growth Rate (CAGR) of 79% from its baseline in 2024 to a significantly higher level by 2027. This robust demand is primarily fueled by increasing requirements for H200 GPUs and ASIC chips, leading to persistently tight supply and demand conditions for HBM in the coming years. JPMorgan believes this structural shortage will last at least until 2027, potentially extending into 2028, as demand growth continues to outpace supply expansion. In this context, memory manufacturers are maintaining a cautious approach to capacity expansion, with no significant increases expected at least until 2027, which will further exacerbate the supply tightness in the HBM market. The report also notes that the value share of HBM within AI capital expenditure is gradually increasing, underscoring its growing importance in cutting-edge AI models. As competition among AI models intensifies, rising associated capital expenditures will introduce further upside risks to the HBM market. JPMorgan anticipates that HBM Average Selling Prices (ASPs) will maintain an upward trend through 2027, particularly in the HPC segment, where pricing power for advanced products like HBM4 and HBM4E will largely reside with memory manufacturers. This not only reflects the high barriers to entry for HBM technology but also signals sustained profitability enhancement in the coming years. Regarding investment strategy, JPMorgan advises investors to monitor all HBM manufacturers, with particular attention on Samsung Electronics and SK hynix. The report suggests that in the short term, Samsung Electronics, leveraging its technological breakthroughs and market strategy for HBM4 products, is well-positioned to capture a larger market share. From a medium to long-term perspective, SK hynix, due to its leading position in the HBM field and the profit potential of its HBM4E products, represents a more attractive investment target. Furthermore, the report mentions that as HBM technology continues to evolve, its value share within server memory will further increase, thereby solidifying the memory industry's crucial role in the ongoing AI cycle. The report also conducts a deep analysis of the competitive landscape, identifying Samsung Electronics as a potential "dark horse" in the competition for HBM4 market share. JPMorgan expects Samsung's HBM4 products to secure a high share of orders from NVIDIA (NVDA.US) by 2026, significantly boosting its competitiveness. Concurrently, SK hynix and Micron (MU.US) are expected to further increase their market shares by expanding supplies to AMD and ASIC customers. The report further points out that as the product lifecycle of HBM3E extends and HBM4 products are launched later in 2027, the competitive dynamics of the HBM market will become more complex and volatile. On pricing, JPMorgan forecasts a relatively moderate price decline in the HBM market for 2026, supported by rising server D5 prices and an anticipated 30% premium for HBM4 products over HBM3E. This pricing structure is expected to help maintain the profitability of leading suppliers, with their operating margins projected to remain above 60%. Additionally, as HBM4 products are rolled out in 2026, their price trajectory will attract significant attention, especially after NVIDIA enhances its pin speed specifications, which is likely to boost both demand and pricing for HBM4. JPMorgan also analyzed the stock price outlook for the memory sector, attributing the significant rally over the past month primarily to rising prices of traditional memory products rather than HBM-specific factors. However, as market acceptance for HBM4 products improves and demand increases, the influence of HBM-related factors on stock prices is expected to become more pronounced. The report highlights that in the coming months, the certification results and demand status for HBM4 products will be key factors influencing memory sector stock prices, urging investors to closely monitor these developments. Overall, JPMorgan's report provides a comprehensive and insightful perspective for investors to understand the significance of HBM technology within the memory industry and its future trajectory. The report not only emphasizes the growth potential of the HBM market in the coming years but also identifies key companies for investors to focus on at different stages. With the continuous development of the AI and HPC markets, HBM technology is poised to be a major growth engine for the memory industry.
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