The shortage of HBM production capacity seems to have just passed, and the expectation of overcapacity has arrived.
Recently, Exane BNP Paribas, a securities department under BNP Paribas, significantly downgraded Micron's rating from Outperform to Underperform, with a target price cut from $140 to $67, citing concerns about HBM overcapacity and its impact on traditional DRAM pricing.
The bank pointed out that due to the oversupply of HBM, the speed of DRAM price correction is faster than expected, which may lead to a broader decline in the DRAM market.
It is expected that by the end of 2025, HBM's production capacity will significantly exceed demand, which will further suppress prices: by the end of 2024, HBM's installed wafer monthly production capacity has reached 315000 pieces, and by 2025 it will reach about 400000 pieces - while the demand during the same period was 168000 pieces, which is even less than half of the supply.
Exane BNP Paribas further pointed out that by 2025, Micron's performance will lag behind other AI semiconductor manufacturers, mainly due to the oversupply of HBM, which has lowered the average selling price of Micron's memory chips; If Micron's memory chips do indeed drop in price as a result, the stock price may even fall below the target price of $67.
Previously, both SK Hynix and Micron have mentioned that all HBM production capacity has been sold out by 2024, and production capacity has been basically allocated by 2025; SK Hynix also stated that order visibility can reach the first quarter of 2026.
According to a research report by Huafu Securities in June, it is estimated that the demand for HBM will double in 2024 and 2025, with a projected demand of 2.08 billion GB by 2025 and an overall market size of 31.1 billion US dollars. Considering the time difference between HBM and GPU shipments, as well as the establishment of HBM inventory by GPU manufacturers, even if the original factory expands production on a large scale, HBM will still be in a long-term supply-demand situation in the future. Based on this, the original factory has negotiated the price for HBM in 2025 in Q2 of this year, with an initial increase of 5-10%.
It is worth mentioning that as one of HBM's main customers, Nvidia's GPU demand will also to some extent affect HBM's demand.
This week, Huang Renxun has already given a "reassurance pill". He said at the Goldman Sachs technology conference, "The demand for (popular chip products) is too strong. Everyone hopes to get the first batch, and everyone wants to order the most." He added that customers have strong demand for the latest generation of Blackwell chips, "It's really tight, and we're doing our best
Overall, Exane BNP Paribas appears to be the first institution to issue a warning of 'HBM overcapacity' in the current situation.
However, it must be acknowledged that the semiconductor industry is highly cyclical. After the rising cycle of "demand explosion, shortage and price increase, investment expansion", it is often followed by a declining cycle of "demand contraction, overcapacity, and price decline", and HBM is also difficult to break out of this cycle. Now that the first alarm bell has sounded, is the reversal really coming? Investors are waiting for an answer.