SK hynix's Zoned UFS 4.0 NAND Flash chip, a mobile NAND solution product for on-device AI applications, released in May (SK hynix)

The global memory chip market is picking up on the back of the artificial intelligence boom, with the chip price expected to rise in the second half of this year, according to industry sources on Monday.

In the wake of a recovery in demand for server and AI chips, such as High Bandwidth Memory chips, the average sales price of DRAM chips is forecast to increase by 8 to 13 percent in the July-September period when compared to the previous quarter, TrendForce, a Taiwan-based chip market tracker said.

"The overall consumer DRAM market continues to exhibit oversupply, but the three major suppliers are clearly intent on raising prices due to the capacity squeeze from HBM production," TrendForce said in its analysis, referring to Samsung Electronics, SK hynix and Micron Technology for the major suppliers.

HBM products use about three times the number of wafers than general DRAM chips.

The price of conventional DRAM is expected to rise by 5 to 10 percent, showing a slight contraction compared to the increase in the second quarter, the market tracker said.

The world's three top chipmakers have been competing to increase their share in the burgeoning HBM market, the chip deemed critical in speeding up data processing for AI applications. SK hynix, the world's second-largest memory chip maker, is currently leading in the rising market, taking about 53 percent share in 2023.

Last year, chips for AI applications, such as the HBM, took about 5 percent in total sales of memory chips, but the portion is expected to grow explosively to reach some 661 percent in 2028, according to market forecasts.

The AI rush is also driving up demand for NAND Flash chips, especially with companies carrying out massive investments in IT infrastructure such as data centers. High-capacity solid state drive chips for enterprise uses are expected to grow 15 to 20 percent in the third quarter this year.

TrendForce predicts the global NAND Flash market to grow 74.1 percent on-year this year. AI data centers are known to require 20 times higher server capacity than general data centers, and the upward trend in the AI sector is expected to drive orders for high-capacity SSDs.

In the first quarter of this year, Samsung Electronics topped the enterprise SSD market with 47.4 percent, followed by SK hynix and its US subsidiary Solidigm with 30.4 percent.

Micron came third in the list with 9.9 percent, and Kioxia and Western Digital took 8.7 percent and 3.6 percent, respectively.

“The demand for DRAM chips, including HBM, is expected to continue its upward trend. As the demand for high-capacity SSD is surging, some also predict a shortage of the advanced chips in the second half of this year," an industry official said.

Meanwhile, chipmakers are expected to ramp up investment in the AI chip sector.

SK hynix announced in the weekend that it will be investing a whopping 3 trillion won in the next five years to cement its leadership in the rising chip sector. About 82 trillion won of the investment will be allocated for developing chips related to AI, such as HBM products.

Micron Technology is also reportedly pushing to expand is production facilities in the US and is also reviewing the option to renew its packaging plant in Malaysia into an HBM production line.