A 12-layer HBM3E, prime and different DDR modules from Samsung Electronics Co. displayed in Seoul, South Korea, on Thursday, April 4, 2024.
SeongJoon Cho | Bloomberg | Getty Pictures
Samsung Electronics was as soon as the dominant participant in a sort of semiconductor often called reminiscence, placing it in a chief place to profit from the rise of synthetic intelligence.
However the South Korean electronics large has now fallen behind its longtime rival SK Hynix within the next-generation chips which were a key element for the AI silicon chief. Nvidia. The consequence? Samsung’s earnings have plummeted, about $126 billion has been wiped from its market worth, based on information from S&P Capital IQ, and an govt has issued a uncommon public apology over the corporate’s latest monetary efficiency.
Reminiscence is a vital sort of chip used to retailer information, and is present in a variety of gadgets from smartphones to laptops. For years, Samsung was the plain chief on this expertise, forward of South Korean rival SK Hynix and US rival Micron.
However as AI purposes like OpenAI’s ChatGPT grew in recognition, the underlying infrastructure wanted to coach the large fashions they depend on turned a much bigger focus. Nvidia has emerged as the highest participant on this house with its graphics processing items (GPUs) changing into the gold normal utilized by tech giants for AI coaching.
An important 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, however there was a small marketplace for it earlier than the AI increase.
That is the place Samsung acquired caught and failed to speculate.
“HBM has lengthy been a really area of interest product and Samsung has not targeted its sources on growing it,” Kazunori Ito, director of fairness analysis at Morningstar, instructed CNBC by e mail.
“Because of the issue of the expertise concerned in stacking DRAMs and the small measurement of the addressable market, it was believed that the excessive growth prices weren’t justified.”
SK Hynix noticed this chance. The corporate aggressively launched HBM chips authorised to be used within the Nvidia structure, and within the course of, the South Korean firm constructed an in depth relationship with the American large. Nvidia’s CEO even requested the corporate to speed up the supply of its next-generation chip, underscoring HBM’s significance to its merchandise.
SK Hynix achieved a file working consequence within the September quarter.
“With robust R&D (analysis and growth) investments and established trade partnerships, SK Hynix maintains an edge in each HBM innovation and market penetration,” Brady Wang, affiliate director at Counterpoint Analysis, instructed CNBC by e mail.
Samsung instructed CNBC that whole HBM gross sales grew greater than 70% quarter-over-quarter within the third quarter. The tech large added that the present product, often called HBM3E, is in mass manufacturing and producing income.
The South Korean tech firm famous that growth of its next-generation HBM4 is “progressing based on plan” and that the corporate is focusing on beginning “mass manufacturing” within the second half of 2025.
Can Samsung make a comeback?
Analysts stated Samsung is lagging behind rivals for various causes, together with underinvestment in HBM and the truth that it’s not a pioneer.
“It is truthful to say that Samsung has failed to shut the hole with SK Hynix on HBM’s growth roadmap,” Morningstar’s Ito stated.
Samsung’s capability to make a comeback within the brief time period appears carefully tied to Nvidia.
An organization should undergo a rigorous qualification course of earlier than Nvidia approves it as an HBM provider – and Samsung has not but accomplished this verification. However Nvidia’s inexperienced gentle might open the door for Samsung to return to development and compete extra successfully with SK Hynix, based on analysts.
“On condition that NVIDIA controls greater than 90% of the AI chip market, the place most HBMs are used, NVIDIA’s approval is important for Samsung to capitalize on the sturdy demand for AI servers,” Ito stated.
A Samsung spokesperson stated the corporate has made “significant progress” on HBM3E and has “accomplished an essential part within the qualification course of.”
“We anticipate to start increasing gross sales within the fourth quarter,” the spokesperson stated.
In the meantime, Wang famous that Samsung’s power in analysis and growth, in addition to the corporate’s semiconductor manufacturing capability, might assist the corporate overtake SK Hynix.
