JP Morgan: HBM enters the fourth year of an upward cycle, structural shortages may persist until 2028.

J.P. Morgan has released an in-depth research report on the storage industry in the Asia-Pacific region, focusing on the development trends of High Bandwidth Memory (HBM) market and its profound impact on the storage industry. The report notes that the HBM market has entered the fourth year of an upward cycle since 2023, and it is expected that this growth trend will continue until 2027. With the surge in demand for Artificial Intelligence (AI) and High-Performance Computing (HPC), the importance of HBM technology is becoming increasingly prominent, with its share in AI capital expenditures and revenues continuing to rise, driving growth in the storage industry. The report provides a detailed analysis of the supply and demand situation in the HBM market, forecasting that by 2027, the Total Addressable Market (TAM) for HBM will grow at a 79% Compound Annual Growth Rate (CAGR) from the baseline level in 2024 to a peak in 2027. This strong market demand is mainly driven by the growth in demand for H200 GPU and ASIC chips, leading to a continued tight supply-demand structure for HBM in the coming years. J.P. Morgan believes that this structural shortage will continue at least until 2027, and possibly even until 2028, as demand growth far exceeds supply growth. Against this backdrop, storage manufacturers are maintaining caution in expanding supply, and it is expected that capacity will not increase significantly until at least 2027, further exacerbating the supply shortage in the HBM market. The report also points out that the share of HBM in AI capital expenditures is gradually increasing, indicating a growing importance of HBM in cutting-edge AI models. With the intensification of competition in AI models, increased related capital expenditures will bring further upside risks to the HBM market. J.P. Morgan expects that the Average Selling Price (ASP) of HBM will continue to grow until 2027, especially in the area of high-performance computing, where the pricing power for high-end products like HBM4 and HBM4E will primarily lie with storage manufacturers. This not only reflects the high barriers to entry of HBM technology, but also foresees that its profitability will continue to strengthen in the coming years. In terms of market strategy, J.P. Morgan advises investors to focus on all HBM manufacturers, especially Samsung Electronics and SK hynix. The report suggests that in the short term, Samsung is poised to gain a higher share in the HBM market with its technological breakthroughs and market strategies in HBM4 products. Looking at the medium to long term, SK hynix with its leading position in the HBM field and profit potential of HBM4E products will become a more attractive investment target. Furthermore, the report mentions that as HBM technology continues to evolve, its value share in server memory will also increase, further solidifying the storage industry's importance in the future AI cycles. The report also provides an in-depth analysis of the competitive landscape in the HBM market, indicating that Samsung Electronics could become a "dark horse" in the competition for market share in HBM4. J.P. Morgan predicts that Samsung's HBM4 products are likely to gain a high share of orders from NVIDIA Corporation in 2026, significantly enhancing its competitiveness in the HBM market. At the same time, SK hynix and Micron will also further increase their market share by expanding their supply to AMD and ASIC customers. The report also points out that as the lifecycle of HBM3E products extends and HBM4 products are launched later in 2027, the competitive landscape of the HBM market will become more complex and changeable. In terms of prices, J.P. Morgan forecasts that the price decline in the HBM market in 2026 will be relatively moderate, mainly due to the rise in server D5 prices and a 30% premium of HBM4 products over HBM3E products. The report believes that this price structure will help maintain the profitability of leading suppliers, with operating profit margins expected to remain above 60%. Additionally, with the market introduction of HBM4 products in 2026, there will be increased attention on their price trends, especially after NVIDIA Corporation upgrades its core specifications, leading to further demand and price increases for HBM4 products. J.P. Morgan also analyzes the stock price outlook of the storage industry, stating that the significant increase in stock prices in the storage industry over the past month is mainly due to the rise in prices of traditional storage products, rather than HBM-related factors. However, as the market acceptance of HBM4 products improves and demand increases, the impact of HBM-related factors on stock prices will gradually become evident. The report points out that in the coming months, the certification results and demand situation of HBM4 products will be crucial factors influencing stock prices in the storage industry, and investors should closely monitor these dynamics. Overall, J.P. Morgan's report provides investors with a comprehensive and in-depth perspective to understand the importance of HBM technology in the storage industry and its future development trends. The report not only emphasizes the growth potential of the HBM market in the coming years but also highlights key companies that investors should focus on at different stages. With the continuous development of AI and HPC markets, HBM technology will become an important growth engine for the storage industry.