JPMorgan: HBM specification downgrade does not change the tight supply, demand CAGR remains at 63% from 2026 to 2028

According to Jinse Finance APP, JPMorgan recently released an industry report on the HBM memory sector, addressing market concerns regarding HBM specification downgrades and updating its views on industry supply and demand, downstream demand, technology iteration, vendor competition, and investment outlook. The bank believes that even if specifications are downgraded, the supply and demand for HBM will remain tight, the compound growth rate of HBM bit demand is expected to reach 63% between 2026 and 2028, the upward price trend will continue, and the memory sector holds investment value.

On the supply and demand side, the report raises HBM demand estimates for 2026-2027 and lowers them for 2028, with the total three-year cumulative bit demand essentially staying unchanged at 163 billion Gb. Due to an increase in the share of 8Hi economical products and a delay in 16Hi technology rollout until at least 2029, the industry will remain in a supply shortage from 2026 to 2028, with the supply-demand gap only slightly improving from -20% to -16%, and the cumulative shortage duration continuing to climb.

On the supply side, the increase in HBM supply mainly relies on Samsung allocating more wafers to HBM production. The HBM market size is expected to reach $160 billion to $282 billion in 2027-2028, accounting for 18-24% of the total DRAM revenue of the three major memory manufacturers. In terms of capacity, 58% of new DRAM capacity from 2025-2028 will be allocated to HBM manufacturing, with HBM's share of total DRAM capacity rising from 19% to 31%.

The downstream customer landscape will undergo a significant shift, with ASIC self-developed chips overtaking NVIDIA as the largest HBM consumer in 2027. In 2026, NVIDIA will still be the core buyer, accounting for 58% of total demand; however, ASIC machine shipment year-on-year growth could reach 102%, far surpassing NVIDIA’s 15%.

In 2027, ASIC's share of HBM demand will rise to 48%, with NVIDIA falling back to 43%. However, the amount of HBM per single NVIDIA chip will still exceed that of ASICs, though the capacity premium between the two will gradually narrow.

In terms of price and profitability, the average selling price of HBM is projected to increase by 54% year-on-year in 2027 and by another 25% in 2028, with the per-Gb price reaching $3.8 in 2028. HBM operating margins are expected to remain in the 60%-70% range, which, while lower than server DRAM under long-term agreements, still represents a notable improvement over previous years. Prices and profit margins for non-long-term contract products are expected to continue to rise through 2028.

In terms of technology, the industry is moving towards a multi-SKU layered approach: 8Hi will have an extended life cycle as an economical product, 12Hi will focus on the high-performance market, TCB will remain the mainstream packaging solution for now, and customized HBM will become a key focus for future competition. NVIDIA’s NVHBM custom products are expected to launch by the end of 2028.

Regarding vendor competition, Samsung and Micron are continually catching up to SK Hynix in market share, with the combined HBM revenue share of the two reaching 59% by 2027. Tighter supply conditions will not suppress average product prices. OpenAI, Anthropic, and other AI labs’ self-developed chips represent long-term upward demand variables that have yet to be fully priced in.

On the investment side, the report maintains a bullish outlook for the memory sector, noting that the market has partially priced in negative impacts from specification downgrades. The investment thesis includes persistent supply-demand tightness for HBM, increased value through customization, and resilient pricing. After a previous correction, share prices have significantly rebounded. Based on shareholder return potential, SK Hynix is favored, and if Samsung increases dividends or buybacks, its investment potential will improve further.