Samsung Electronics' move to turn a 20-year-old cleanroom at its Hwaseong Campus Complex 1 (H1) into a "commodity DRAM-only end-fab" is aimed at maximizing production efficiency by consolidating end-fab lines scattered across Hwaseong and Cheonan in one location. At the same time, the company is pursuing an expansion to increase commodity DRAM supply by installing additional production equipment in the available space. It amounts to a race for speed, cutting the time needed to build a new plant and shipping commodity DRAM, whose prices are soaring, more quickly.
According to market research firm DRAMeXchange, the average trading price of commodity DRAM (based on DDR4 8Gb) rose more than 80% in the first half of this year. The average selling price growth rate of the latest standard, DDR5 (based on 64GB modules), reached 190% during the same period. This exceeds the price growth rate of high-bandwidth memory (HBM), considered a high-value-added memory. The average selling price of HBM3E (fifth generation) has not risen significantly compared with last year.
While changes in market conditions are immediately reflected in the selling price of commodity DRAM, HBM has a high proportion of long-term fixed-price contracts, making it difficult to immediately reflect recent memory price increases. In addition, HBM consumes about four times more wafers than commodity DRAM, so its supply volume is structurally smaller. This is the backdrop to the reversal in which the profitability of commodity products is overtaking that of high-value-added products.
For Samsung Electronics (005930.KS), supplying as much commodity DRAM as possible in the short term becomes a means of maximizing profitability. As Apple, a key customer for commodity DRAM, has begun reviewing alternative suppliers such as China's Changxin Memory Technologies (CXMT), the need to strengthen customer management beyond market share has also grown.
The company is rapidly pursuing main fab expansion centered on its Pyeongtaek Campus, but end-fabs are cited as one of the bottleneck factors. Hwaseong H1 is regarded as the optimal site to resolve the bottleneck. By consolidating end-fab lines at Hwaseong H1 while also pursuing expansion, Samsung Electronics will be able to integrate and operate end-fab lines that had been scattered across Hwaseong Campus Complex 2 (H2) and Cheonan in one location. The plan is also to build new end-fab lines in the remaining space at H1.
Hwaseong H1, which opened in the early-to-mid 2000s, previously produced older memory such as 2D NAND flash but was shut down over the past three to four years due to worsening profitability. With a lower ceiling height than the latest cleanrooms, it is difficult to place the enlarged advanced equipment used in main fabs there. On the other hand, end-fab equipment is relatively small and has less demanding requirements for the production environment, such as vibration and temperature. This is why H1 is evaluated as the optimal location for an end-fab.
Because it utilizes an existing cleanroom, investment efficiency is also high. Building a new fab takes years, from securing land to constructing the building and setting up power, water, and gas facilities. Since H1 already has basic infrastructure such as water and power in place, the line can be quickly brought into operation with only equipment installation and internal remodeling.
Another strength is that the Hwaseong main fab and end-fab can be bundled within a single site. Currently, some commodity DRAM wafers complete circuit formation at the Hwaseong main fab and then move to the Cheonan end-fab for the metal wiring process. When sites are separated, wafer transport and waiting time increase, but consolidating end-fabs in one location can reduce such inefficiencies.
The Pyeongtaek Campus has efficiently operated front-end and back-end processes by building end-fab lines together, matched to main fab production capacity, from the construction stage. Samsung Electronics plans to transplant this unified production-base system to Hwaseong to raise the production efficiency of commodity DRAM.
Expanding commodity DRAM production capacity is also expected to have the effect of solidifying trust with global big tech. Samsung Electronics is expanding memory supply cooperation not only with artificial intelligence (AI) chipmakers such as Nvidia and Broadcom, but also with hyperscalers and AI model developers including Google, Microsoft, and OpenAI. These customers do not purchase only HBM but also demand commodity DRAM, such as low-power DRAM modules for central processing units (CPUs), known as SOCAMM.
Behind Samsung Electronics' rush to increase production is also the pursuit by Chinese memory companies. As mobile and PC manufacturers have recently held supply talks with China's CXMT, the possibility of a mid-to-long-term entry into the global market has been raised. Currently, CXMT's shipments of the latest DRAM, such as DDR5, are effectively concentrated on the Chinese domestic market, but observers say it could expand its sales channels to overseas set makers such as Apple and Dell in the future.
Lisa Li, president of Chinese market research firm Sigmaintell, analyzed, "CXMT will increase its production capacity by less than 10% next year," adding, "It will only be around 2029 that it can supply DRAM to overseas customers."
An industry official said, "In a situation where commodity DRAM prices have surged, not only wafer input but also end-fab processing speed determine earnings," adding, "Unifying the Hwaseong production facilities is a strategy to increase short-term shipment volume and profitability, and in the long term, to protect global customers from Chinese companies."
