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Two chipmakers recently surged in value, both crossing the trillion-dollar valuation line within a day of each other. It’s another unexpected gold rush, thanks to the AI boom.
South Korean company SK Hynix’s market capitalization went above $1 trillion last week, and its shares have climbed more than 250% since the start of the year, CNBC reported (1). SK Hynix “has emerged as a key supplier to AI chip giant Nvidia, cementing its position at the center of the global AI supply chain,” the report says.
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The day before, American company Micron Technology’s market value also surpassed $1 trillion for the first time.
CNBC reported that Micron’s rally “came as UBS tripled its price target on the stock from $535 to $1,625 a share, citing long-term agreement opportunities with partially fixed pricing (2).” That price target could see the stock could continue to climb, or even double, CNBC said.
Why are memory chips so hot?
What’s behind the meteoric rise of these chipmakers?
They both make high-bandwidth memory (HBM) semiconductors. This hardware is essential for AI — it’s suddenly become “one of the industry’s most sought-after components,” according to Scientific American (3).
The trillion-dollar milestone “points to a larger shift in the AI supply chain,” Scientific American says.
While companies like Nvidia make graphics processing units (GPUs), the chips used to build AI systems, HBM “plays an equally important role behind the scenes,” according to a report from The PC Enthusiast (4).
“Modern AI models process vast amounts of data, and even the fastest processors can become bottlenecked if they cannot access that data quickly enough,” the report says. That’s where HBM chips come in, as they deliver “significantly more memory bandwidth than conventional memory technologies while maintaining good power efficiency.”
HBM chips are designed differently than the memory chips found “inside a laptop or phone,” Scientific American says. “Instead of spreading memory chips across a board, HBM stacks layers of memory vertically and places them close to the processor.”
How powerful are these chips? According to Scientific AmericanMicron’s HBM4 chips “can reach more than 2.8 terabytes per second of bandwidth and are designed for Nvidia’s next-generation Vera Rubin GPUs.”
