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Investing.com -- Morgan Stanley analysts are increasingly bullish on the potential of mobile HBM (High Bandwidth (NASDAQ:BAND) Memory) to drive significant growth in the mobile and edge AI smartphone market, particularly benefiting Samsung Electronics (KS:005930) and SK Hynix.
The analysts said in a note Wednesday that mobile HBM, which could first be widely used in the iPhone 18 release in 2026, is underappreciated by the broader market, especially regarding its impact on production equipment.
The development of mobile HBM is underway, with Samsung and SK Hynix said to be leading the charge with their respective technologies: VCS (Vertical Cu post Stack) and VFO (Vertical Fan Out).
According to Morgan Stanley (NYSE:MS), "if the penetration rate of AI smartphones with mobile HBM onboard reaches 20%, production capacity greater than HBM at end-2024 will be necessary," signaling major growth in the equipment market.
They add that this growth would require mobile HBM production capacity to surpass that of server HBM by the end of 2024.
The analysts also forecast significant increases in demand for equipment from companies like DISCO and Advantest, which are positioned to benefit from the growing need for high-precision tools such as grinders, testers, and probers.
"For each 10% rise in adoption rate in smartphones, 156KWPM of production capacity is needed," meaning the widespread use of mobile HBM could drastically boost production needs.
Morgan Stanley has raised its earnings forecasts for DISCO and Advantest by 71% above consensus, also increasing their price targets.
The firm notes that "equity markets are overlooking the growth potential of mobile HBM equipment," as the technology continues to gain traction in the smartphone industry, offering strong upside for both Samsung and SK Hynix.