A Samsung Electronics Co. 12-layer HBM3E, excessive, and totally different DDR modules organized in Seoul, South Korea, on Thursday, April 4, 2024.
SeongJoon Cho | Bloomberg | Getty Images
Samsung Electronics was as quickly because the dominant participant in a type of semiconductor known as memory, putting it in an unbelievable place to capitalize on the expansion of artificial intelligence.
But the South Korea electronics large has now fallen behind its long-time rival SK Hynix in next-generation chips which have been key half for AI silicon chief Nvidia. The finish consequence? Samsung’s income has plunged, spherical $126 billion has been wiped off its market value, in response to info from S&P Capital IQ, and an govt issued a unusual public apology regarding the agency’s present financial effectivity.
Memory is a important type of chip used to retailer info, and it might be current in a plethora of items from smartphones to laptops. For years, Samsung was the straightforward chief on this experience, ahead of South Korean rival SK Hynix and U.S. competitor Micron.
But as AI capabilities akin to OpenAI’s ChatGPT rose in status, the underlying infrastructure required to educate the massive fashions they rely on turned a a lot greater focus. Nvidia has emerged as the very best participant on this home with its graphics processing objects (GPUs) which have develop to be the gold regular utilized by tech giants for AI teaching.
An necessary part of that semiconductor construction is high-bandwidth memory, or HBM. This subsequent expertise of memory contains stacking various dynamic random entry memory (DRAM) chips, however it certainly had a small market sooner than the AI progress.
That’s the place Samsung obtained caught out and failed to invest.
“HBM has been a very niche product … for a long time and Samsung has not focused its resources on its development,” Kazunori Ito, director of equity evaluation at Morningstar, suggested CNBC by email correspondence.
“Due to the difficulty of the technology involved in stacking DRAMs and the small size of the addressable market, it was believed that the high development costs were not justified.”
SK Hynix seen this opportunity. The agency aggressively launched HBM chips which had been approved for use in Nvidia construction and, throughout the course of, the South Korean company established an in depth relationship with the U.S. large. Nvidia’s CEO even requested the company to rush up present of its subsequent expertise chip, underscoring the importance of HBM to its merchandise.
SK Hynix posted file quarterly working income throughout the September quarter.
“With strong R&D (research and development) investments and established industry partnerships, SK Hynix maintains an edge in both HBM innovation and market penetration,” Brady Wang, associated director at Counterpoint Research, suggested CNBC by email correspondence.
Samsung suggested CNBC that, throughout the third quarter, entire HBM product sales grew larger than 70% quarter-on-quarter. The tech large added that the current product known as HBM3E is in mass manufacturing and producing product sales.
The South Korean tech agency well-known that progress for its next-generation HBM4 is “underway according to plan” and that the company is concentrating on starting “mass production” throughout the second half of 2025.
Can Samsung make a comeback?
Analysts talked about that Samsung is lagging behind opponents for a wide range of causes, along with underinvestment in HBM and the reality that it isn’t a first-mover.
“It is fair to say that Samsung has not been able to close the gap with SK Hynix on the HBM development roadmap,” Morningstar’s Ito talked about.
Samsung’s talent to make a comeback throughout the temporary time interval appears to be intently linked to Nvidia.
An group ought to cross a strict qualification course of sooner than Nvidia approves it as a HBM supplier — and Samsung has not however achieved this verification. But a inexperienced gentle from Nvidia might open the door for Samsung to return to improvement and compete further efficiently with SK Hynix, in response to analysts.
“Since NVIDIA holds more than 90% of the AI chip market, where most HBMs are used, NVIDIA’s approval is critical for Samsung to benefit from the robust demand for AI servers,” Ito talked about.
A Samsung spokesperson talked about that the company has made “meaning progress” regarding HBM3E and has “completed an important phase in the qualification process.”
“We expect to start expanding sales in the fourth quarter,” the spokesperson talked about.
Meanwhile, Wang well-known that Samsung’s energy in evaluation and progress, along with the company’s semiconductor manufacturing functionality that may help it catch as a lot as SK Hynix.
