A Samsung Electronics Co. 12-layer HBM3E, high, and different DDR modules organized in Seoul, South Korea, on Thursday, April 4, 2024.
SeongJoon Cho | Bloomberg | Getty Photographs
Samsung Electronics was as soon as the dominant participant in a sort of semiconductor referred to as reminiscence, placing it in an incredible place to capitalize on the growth of synthetic intelligence.
However the South Korea electronics big 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 consequence? Samsung’s revenue has plunged, round $126 billion has been wiped off its market worth, based on information from S&P Capital IQ, and an government issued a uncommon public apology concerning the firm’s latest monetary efficiency.
Reminiscence is a essential sort 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 know-how, forward of South Korean rival SK Hynix and U.S. competitor Micron.
However as AI functions comparable to OpenAI’s ChatGPT rose in reputation, the underlying infrastructure required to coach the large fashions they depend on turned a much bigger focus. Nvidia has emerged as the highest participant on this area with its graphics processing items (GPUs) which have turn out to be the gold customary utilized by tech giants for AI coaching.
An important a part of that semiconductor structure is high-bandwidth reminiscence, or HBM. This subsequent era of reminiscence entails stacking a number of dynamic random entry reminiscence (DRAM) chips, however it had a small market earlier than the AI growth.
That is the place Samsung acquired 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 sources on its improvement,” Kazunori Ito, director of fairness analysis at Morningstar, informed CNBC by e-mail.
“Because of the problem of the know-how concerned in stacking DRAMs and the small dimension 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 had been authorised to be used in Nvidia structure and, within the course of, the South Korean agency established an in depth relationship with the U.S. big. Nvidia’s CEO even requested the corporate to hurry up provide of its subsequent era chip, underscoring the significance of HBM to its merchandise.
SK Hynix posted report quarterly working revenue 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, informed CNBC by e-mail.
Samsung informed CNBC that, within the third quarter, complete HBM gross sales grew greater than 70% quarter-on-quarter. The tech big added that the present product referred to as HBM3E is in mass manufacturing and producing gross sales.
The South Korean tech firm famous that improvement for its next-generation HBM4 is “underway based on plan” and that the corporate is concentrating on beginning “mass manufacturing” within the second half of 2025.
Can Samsung make a comeback?
Analysts stated that Samsung is lagging behind rivals for various 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 capacity to make a comeback within the quick 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 gentle from Nvidia might open the door for Samsung to return to progress and compete extra successfully with SK Hynix, based on analysts.
“Since NVIDIA holds greater than 90% of the AI chip market, the place most HBMs are used, NVIDIA’s approval is essential for Samsung to profit from the sturdy demand for AI servers,” Ito stated.
A Samsung spokesperson stated that the corporate has made “which means progress” concerning HBM3E and has “accomplished an essential section within the qualification course of.”
“We anticipate to start out 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 would assist it catch as much as SK Hynix.
