Kim Tae-hong’s second in-depth analysis of semiconductors

A view of Samsung Electronics' Pyeongtaek Campus 사진 확대 A view of Samsung Electronics’ Pyeongtaek Campus

Shares of Samsung Electronics and SK hynix, which surged in the first half of the year, have recently undergone a sharp correction. The main reasons appear to be growing concerns over weaker demand as cash flow at U.S. big tech companies, key buyers of memory semiconductors, deteriorates, as well as fears of oversupply driven by the advancement of China’s semiconductor industry, including ChangXin Memory Technologies (CXMT).

Going forward, the key driver of market moves will be how memory semiconductor prices and supply volumes change. Maeil Business Plus spoke with Kim Tae-hong, CEO of Growth Hill Asset Management, about Samsung Electronics and SK hynix’s production expansion schedule and price outlook. The following is Kim’s commentary. Please use it as a reference for investment decisions.

At last, the long-awaited cloud revenue and investment scale from Google (Alphabet Inc.) have been announced. The most important cloud revenue figure showed a stunning 82% growth rate, beating expectations, while the backlog also increased by more than $5 billion from the previous quarter.

Capital expenditure, which has a major impact on semiconductor stocks, was also raised to $200 billion, up about 10% from the $185 billion announced in the second quarter. The disappointing part for Google shareholders is that the increase in investment pushed free cash flow into the red, but that is not necessarily bad news for semiconductor investors.

Because semiconductor stocks had fallen sharply, this is data that many investors had been waiting for in silence. Of course, uncertainty remains because Amazon, Meta Platforms, and Microsoft have yet to report, but the important point is that the semiconductor shortage on the demand side is still continuing.

Following the previous discussion on AI industry growth and semiconductor demand, this second part will analyze the supply side. When will semiconductor supply begin to increase enough to affect prices?

Samsung Electronics and SK hynix production is set to rise sharply in the second quarter of next year

First, Samsung Electronics is making large-scale investments in Pyeongtaek. The ramp-up of the P4 line is nearing completion, and about 90,000 DRAM wafers per month have been added.

The P5 line is under construction as a massive three-story hybrid fab that will simultaneously build memory chips, including DRAM and HBM, as well as foundry capacity, with completion targeted for the second quarter of 2027.The original goal was to begin operations in early 2028, but the construction period has recently been shortened, making production possible as early as the end of the second quarter next year.

The P5 plant, with a total investment of 160 trillion won, will bring Fab 1 online first, while Fab 2 is targeted for commercial operation in 2029. After that, new groundbreakings are being prepared in Yongin and Gwangju.

What really matters is that once the P5 plant is completed in stages, initial output will be 90,000 wafers, and when Fab 2 is finished, production could reach at least 300,000 wafers and as many as 600,000 wafers. That is an enormous volume, enough to supply more than 50% of Samsung Electronics’ current total memory semiconductor capacity of about 700,000 wafers.

[Designer Kim Hyung-gyu] 사진 확대 [Designer Kim Hyung-gyu]

In the case of SK hynix, equipment installation at the M15X plant in Cheongju has been completed, making full-scale mass production possible in the second half of this year. Supply is expected to expand through a dedicated production facility for HBM3E and HBM4E. The Yongin semiconductor cluster, Y1 and Y2, will receive more than 120 trillion won in investment and is expected to be completed as a mega cluster comparable to Samsung’s P5.

Y1 fab is expected to be brought forward to the second quarter of 2027, and once completed, monthly output is projected at 200,000 wafers. In addition, when Y2 fab is completed in 2028, output is expected to rise to 400,000 wafers per month. That would represent a sequential increase of about 50% each time, compared with SK hynix’s existing monthly production capacity of 550,000 wafers.

In conclusion The point at which the semiconductor supply bottleneck eases for Samsung Electronics and SK hynix can be said to begin in the second quarter of next year. However, meaningful large-scale supply appears likely only from 2028, when the first fabs are fully operational.

The full article, which includes Kim Tae-hong’s outlook on semiconductor prices, can be found on Maeil Business Plus, Maeil Business Newspaper’s premium finance and investment content platform. Search for ‘Maeil Business Plus’ on Naver, or scan the QR code below with your smartphone to access it.

사진설명 사진 확대

This article has been translated by GripLabs Mingo AI.