A Samsung Electronics Co. 12-layer HBM3E, prime, and different DDR modules organized in Seoul, South Korea, on Thursday, April 4, 2024.
SeongJoon Cho | Bloomberg | Getty Photos
Samsung Electronics was as soon as the dominant participant in a sort of semiconductor often called reminiscence, placing it in an excellent place to capitalize on the growth of synthetic intelligence.
However the South Korea electronics large has now fallen behind its long-time rival SK Hynix in next-generation chips which have been key element for AI silicon chief Nvidia. The outcome? Samsung’s revenue has plunged, round $126 billion has been wiped off its market worth, in line with information from S&P Capital IQ, and an govt issued a rare public apology in regards to the firm’s latest monetary efficiency.
Reminiscence is a crucial kind of chip used to retailer information, and it may be present in a plethora of gadgets from smartphones to laptops. For years, Samsung was the plain chief on this expertise, forward of South Korean rival SK Hynix and U.S. competitor Micron.
However as AI functions corresponding to OpenAI’s ChatGPT rose in recognition, the underlying infrastructure required to coach the massive fashions they depend on grew to become a much bigger focus. Nvidia has emerged as the highest participant on this house with its graphics processing models (GPUs) which have grow to be the gold customary utilized by tech giants for AI coaching.
A vital a part of that semiconductor structure is high-bandwidth reminiscence, or HBM. This subsequent technology of reminiscence entails stacking a number of dynamic random entry reminiscence (DRAM) chips, but it surely had a small market earlier than the AI growth.
That is the place Samsung received caught out and failed to take a position.
“HBM has been a really area of interest product … for a very long time and Samsung has not targeted its assets on its improvement,” Kazunori Ito, director of fairness analysis at Morningstar, instructed CNBC by e-mail.
“As a result of problem of the expertise concerned in stacking DRAMs and the small measurement of the addressable market, it was believed that the excessive improvement prices weren’t justified.”
SK Hynix noticed this chance. The corporate aggressively launched HBM chips which have been authorised to be used in Nvidia structure and, within the course of, the South Korean agency established a detailed relationship with the U.S. large. Nvidia’s CEO even asked the company to speed up supply of its subsequent technology chip, underscoring the significance of HBM to its merchandise.
SK Hynix posted record quarterly operating profit within the September quarter.
“With robust R&D (analysis and improvement) investments and established trade partnerships, SK Hynix maintains an edge in each HBM innovation and market penetration,” Brady Wang, related director at Counterpoint Analysis, instructed CNBC by e-mail.
Samsung instructed CNBC that, within the third quarter, whole HBM gross sales grew greater than 70% quarter-on-quarter. The tech large added that the present product often called HBM3E is in mass manufacturing and producing gross sales.
The South Korean tech firm famous that improvement for its next-generation HBM4 is “underway in line with plan” and that the corporate is focusing on beginning “mass manufacturing” within the second half of 2025.
Can Samsung make a comeback?
Analysts stated that Samsung is lagging behind opponents for quite a few causes, together with underinvestment in HBM and the truth that it isn’t a first-mover.
“It’s honest to say that Samsung has not been capable of shut the hole with SK Hynix on the HBM improvement roadmap,” Morningstar’s Ito stated.
Samsung’s capability to make a comeback within the brief time period seems to be intently linked to Nvidia.
An organization should cross a strict qualification course of earlier than Nvidia approves it as a HBM provider — and Samsung has not but accomplished this verification. However a inexperienced mild from Nvidia may open the door for Samsung to return to progress and compete extra successfully with SK Hynix, in line with analysts.
“Since NVIDIA holds greater than 90% of the AI chip market, the place most HBMs are used, NVIDIA’s approval is crucial for Samsung to profit from the strong demand for AI servers,” Ito stated.
A Samsung spokesperson stated that the corporate has made “which means progress” concerning HBM3E and has “accomplished an necessary part within the qualification course of.”
“We anticipate to begin increasing gross sales within the fourth quarter,” the spokesperson stated.
In the meantime, Wang famous that Samsung’s energy in analysis and improvement, in addition to the corporate’s semiconductor manufacturing capability that might assist it catch as much as SK Hynix.
