The semiconductor industry is in recovery mode this year, thanks to the growing demand for chips from multiple applications such as smartphones, personal computers (PCs), and data centers. But there is one particular niche within this industry that is enjoying a bigger boost than the broader semiconductor market.
The Semiconductor Industry Association is expecting the global semiconductor market to record 16% revenue growth this year. However, the market for memory chips is expected to clock much faster growth than the semiconductor space. Market research firm Gartner is expecting a 66% jump in memory spending this year.
Micron Technology has been benefiting big time from this surge in memory sales, as is evident from its latest quarterly results. Shares of the memory specialist have gained 54% in 2024, and a potential acceleration in its growth could help it soar further. However, there is another memory stock that has clocked healthy gains of 42% so far this year and that could get a nice shot in the arm when it releases its quarterly results later this month — Lam Research (NASDAQ: LRCX).
Let’s look at the reasons why.
Artificial intelligence is boosting memory demand
On its latest earnings conference call, Micron Technology management pointed out that the demand for memory that’s deployed in artificial intelligence (AI) chips — known as high-bandwidth memory (HBM) — is booming. More specifically, Micron management pointed out that its HBM capacity “is sold out for calendar 2024 and 2025, with pricing already contracted for the overwhelming majority of our 2025.”
The chipmaker is anticipating its HBM revenue to increase from “several hundred million dollars” in fiscal 2024 to “multiple billions of dollars” in fiscal 2025. Such solid demand for HBM explains why memory manufacturers such as Micron are looking to expand their production capacities. For instance, Micron’s peer SK Hynix has commissioned the construction of a new facility to meet surging HBM demand.
Hynix is anticipating HBM production capacity to more than double in 2024, and a similar scenario is…
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