In a strategic move to stay ahead of potential US export bans, Chinese technology powerhouses like Huawei and Baidu have been aggressively stockpiling Samsung’s high-bandwidth memory (HBM) chips since the beginning of the year. This pre-emptive action is driven by the anticipation that the United States may soon impose restrictions on the export of these critical components to China.
According to sources cited by Reuters, China has become a significant market for Samsung, accounting for approximately 30% of the company’s HBM chip revenues in the first half of the year. The surge in demand is not only fuelled by established tech giants like Huawei and Baidu but also by a wave of emerging Chinese start-ups eager to harness the power of AI.
HBM chips, known for their role as AI accelerators, are essential for advancing artificial intelligence technologies. As the geopolitical landscape shifts, Chinese firms are making calculated moves to secure their technological edge by ensuring a steady supply of these vital components.
According to a Reuters report, Chinese companies are particularly focused on acquiring HBM2E chips, which are a generation behind HBM3 and two generations behind the cutting-edge HBM3E. In response to potential supply chain disruptions, China is planning to domestically produce HBM2 chips, the most mature and least advanced model in the series.
The global market for HBM chips is poised for significant growth. Yole Group, a France-based research institute, projected in February 2024 that HBM market revenue could soar to $14 billion in 2024, up from $2.7 billion in 2022. By 2029, this figure is expected to reach $37.7 billion, reflecting a compound annual growth rate of 38% from 2023 to 2029.
Yole Group projects that the share of high-bandwidth memory (HBM) in the overall DRAM market revenue will surge from 3% in 2022 to 19% this year. However, analysts at Fangzheng Securities have a more conservative outlook on global HBM demand, estimating it will reach $9.14 billion, or 40 million units, in 2024.
According to their analysis, Nvidia is expected to be the largest consumer of HBM chips, accounting for 58% of the total demand. Google follows with 15%, AMD with 14%, and Chinese firms with 7%. The remaining 6% will be utilized by other technology companies.
On Thursday, Taiwan’s DigiTimes reported that the stockpiling of Samsung’s HBM chips by Chinese firms has significantly contributed to the growth in China’s overall chip imports during the first seven months of 2024. However, Li Yali, a columnist at Guancha.cn, offered a different perspective in an article published the same day. Li suggested that the increase in China’s chip imports from January to July was more likely driven by a rebound in global demand for Chinese consumer electronic products rather than the stockpiling of HBM chips.
According to Chinese Customs data, China’s imports of integrated circuits grew by 14.5% to 308.2 billion units in the January-July period, with the value rising by 11.5% to $212.1 billion compared to the same period last year. Despite this growth, the figures remain below the levels recorded in 2022, following last year’s down cycle.
In June, Bloomberg revealed that Alan Estevez, head of the US Commerce Department’s Bureau of Industry and Security (BIS), planned visits to the Netherlands and Japan. His mission: to persuade their governments to halt sales of HBM chip-making equipment from ASML and Tokyo Electron to China. By July 31, Bloomberg reported that the US might invoke its Foreign Direct Product Rule (FDPR) to prevent China from acquiring HBM chips produced by South Korea’s SK Hynix and Samsung Electronics. Reuters added that a new wave of chip export controls is expected to be announced by the end of August.
Meanwhile, on August 4, Tom’s Hardware reported that China’s ChangXin Memory Technologies (CXMT) has allegedly started mass production of HBM2 chips. This information, sourced from DigiTimes and South Korea’s ETNews, suggests that China is ramping up its domestic chip production capabilities.
As of now, Chang Xin Memory Technologies (CXMT) has not publicly disclosed the status of its HBM chip production. However, a Reuters report from May 15 indicated that CXMT, in collaboration with chip packaging and testing company Tongfu Microelectronics, had developed sample HBM chips and presented them to potential clients.
Chinese commentators have highlighted the potential of companies like JCET Group, Tongfu Microelectronics, and Huatian Technology to produce HBM chips. While Tongfu Microelectronics is recognized as a strong contender in this field, experts believe it still requires additional time to gear up for mass production.
In December 2022, Nantong Tongfu, a wholly-owned subsidiary of Tongfu Microelectronics, completed the construction of its phase three factory in Nantong, Jiangsu province. On February 22 this year, Tongfu Microelectronics celebrated the arrival of its first 2.5D/3D integrated circuit packaging machine with a grand ceremony. However, the company did not reveal the brand of the new machine.
On March 1, the Ministry of Ecology and Environment published an environmental evaluation report for Nantong Tongfu’s HBM chip production facility. The report revealed that the facility, staffed by 250 employees, has the capacity to produce 36,000 units of 80-millimeter-long HBM chips annually. While Tongfu Microelectronics did not comment on its own progress, the company informed investors last month that the HBM market continues to be dominated by international chipmakers.