Samsung’s New Strategy: Producing DDR5 Is More Profitable Than HBM3E

It once seemed that the artificial intelligence boom had made the production of high-speed HBM3E (High Bandwidth Memory) more profitable than traditional DDR5. However, for Samsung, the situation turned out to be the opposite: the company currently finds it far more profitable to produce DDR5 than HBM3E, since it earns a large share of its profits from sales of popular DDR5 variants.

Considering this, the company has decided to revise its priorities and focus on DDR5 memory production.

Profitability of DDR5 and HBM3E

If we look at the profitability of the two memory types, we get the following figures.

The price of DDR5 continues to rise. By the end of next year, the cost of a 64 GB module is expected to exceed $500. This will make it possible to sell the corresponding memory chips with a profit margin of around 75%.

As for HBM3E, its profitability does not exceed 30%, even though Samsung’s product is a cheaper alternative to similar solutions. In this segment, its competitor SK hynix has a margin of around 60%.

That is why Samsung sees more sense in focusing on the production of DDR5, LPDDR5X, and GDDR7 rather than trying to catch up with competitors in the HBM3E segment, where the market is already saturated.

Focus on DDR5 and HBM4

Samsung has expressed its readiness to allocate additional production capacity for DDR5 in order to meet demand.

However, despite the fact that the company will not actively compete in the HBM3E segment, it has big plans for the next generation — HBM4. In the next generation of this type of memory, Samsung has a much better chance of securing strong market positions.