Bernstein: Chip makers upgraded amid surging HBM growth

Investing.com - Bernstein analysts are predicting a surge in High Bandwidth (NASDAQ: BAND) Memory (HBM) by 2025, driven by increased CoWoS (chip-on-wafer-on-substrate) capacity and continued demand strength which is set to boost Samsung (KS:005930), SK Hynix (KS:000660) and Micron Technology (NASDAQ: MU).

The expansion in CoWoS capacity, expected to grow 2.4 times in 2024, is progressing as planned. Furthermore, a predicted 80% year-on-year expansion in 2025 is anticipated as Taiwan Semiconductor Manufacturing Co Ltd (BVMF:TSMC34) gains confidence in demand sustainability.

The introduction of HBM3E is also expected to modestly increase HBM prices in 2024, but competition might slightly push the trend downward from 2025.

Consequently, HBM revenue is projected to reach $12 billion and $25 billion in 2024 and 2025, respectively, accounting for 12% and 18% of the total DRAM revenue.

Despite slower-than-expected progress, Bernstein analysts believe that Samsung's HBM3/3E will eventually be adopted by NVIDIA (NASDAQ: NVDA).

The analysts forecast 2025 to be a record year, driven by continued price increases.

Together with HBM, this is projected to result in record-high EPS for all three suppliers in 2025.

The analysts reiterated an Outperform rating for Samsung with price target at KRW104,000 (vs KRW92,000).

SK hynix was rated Outperform with price target at KRW240,000 (vs KRW185,000).

Micron was rated Outperform, with price target at US$140 (vs $105).

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