After a series of setbacks, Samsung is catching up and trying to challenge SK hynix's supremacy in the HBM (High Bandwidth Memory) chip market.
On July 30, according to media reports citing people familiar with the matter, Samsung has made significant progress in seizing the HBM market, and one of the company's HBM3 chips has been certified by AI giant NVIDIA. Samsung expects the company's next-generation HBM3 chip to also be approved within 2-4 months. Da Mo analysts are also very bullish on Samsung's stock price, and they believe that Samsung will seize at least another 10% of the HBM market by next year, when revenue will surge.
Samsung has been looking forward to this result for a long time. It is reported that since 2023, Samsung has been working hard to pass NVIDIA's certification of products such as HBM3 and HBM3E.
Earlier this year, discussions about Samsung's HBM failing to be verified by Nvidia and Samsung's HBM yield rate being too low appeared in several media reports. Samsung has also been slow to get orders from Nvidia. Nvidia currently has a market share of more than 80% of the global AI GPU market, and it is extremely important to break into NVIDIA's HBM supply chain.
However, Samsung's rival SK hynix has been the largest supplier of Nvidia's HBM chips. In the wave of AI, Nvidia has made a lot of money, and SK hynix's performance has also risen.
Although Samsung is the largest memory chip manufacturer in the industry, it lags behind SK hynix, the world's second-largest memory manufacturer, in the HBM field. According to market research firm TrendForce, SK hynix led the HBM market last year with a 53 percent market share, followed by Samsung Electronics (38 percent) and Micron (9 percent).
However, Samsung is struggling to turn the tide.
Da Mo: Samsung's HBM market share will increase by at least 10% by 2025
According to a report by Morgan Stanley, the HBM market size is expected to grow from $4 billion last year to $71 billion by 2027. The sooner Samsung is backed by AI giant Nvidia, the more revenue it will earn from this growth.
"Investors' perception of Samsung may soon change, and the situation is rapidly improving." Morgan Stanley analysts Shawn Kim and Duan Liu wrote in a research note this month.
The two analysts ranked Samsung as a top pick stock in the report because they believe that Samsung's HBM market share will increase by at least 10% by 2025 and its revenue will increase by about $4 billion.
At present, a number of technology giants such as Microsoft, Google, Amazon, Apple and Meta are increasing their investment in AI, and the market demand for HBM is bound to surge in the future. Analysts at Sanford C. Bernstein said in a July note that Nvidia will continue to use HBM3E in almost all of its products until 2025, and chip competitors will continue to use it even in 2026.
According to the details in the quarterly report, Samsung has been producing HBM3 chips since the second half of last year. Samsung has started supplying HBM3 to Nvidia for its H20 chips, according to people familiar with the matter.
To change the backward situation, Samsung removed the semiconductor leader in one fell swoop
Laggards in areas such as HBM have also prompted Samsung to remove its semiconductor leaders. In May of this year, Jun Young-hyun, who has a wealth of experience, was appointed to take on the responsibility of developing and selling HBM chips to Nvidia, a storage giant.
It is reported that at that time, Samsung HBM had heat dissipation and power consumption problems. According to the source, Samsung is having trouble solving the so-called thermal coupling problem. HBM consists of a set of DRAM chips stacked on top of each other, with the latest generation stacking up to eight layers. Each layer generates a lot of heat, which is then paired with NVIDIA's GPU, which itself can reach 100 degrees Celsius. Without proper heat dissipation and cooling materials, the entire stack is at risk of melting.
After Jun Young-hyun became the leader of Samsung Semiconductor, he actively sought a solution to the appeal issue. The 63-year-old executive convened a series of meetings to explore the technical details and find out the root cause of the problem.
Eventually, Samsung modified the HBM design to address heat dissipation and power consumption issues. According to the source, this led to the approval of Nvidia for Samsung's HBM3.
Samsung said that since Jun Young-hyun took over, the company has prioritized a culture of brainstorming and problem-solving. The company added that its HBM products have no issues with heat dissipation and power consumption, and that no design changes have been made for specific customers.
"We've never seen Samsung in this situation," said Jim McGregor, an analyst at research firm Tirias Research, "and the industry and Nvidia need Samsung more than anyone else, but they need Samsung to give it their all."
The "overlord" SK hynix has not slackened, and the three-star road is long and difficult
At the moment, Samsung's competitor SK hynix is not letting up. SK hynix, a major supplier of Nvidia's HBM chips, has soared more than 150% since the beginning of 2023, more than three times the performance of Samsung's stock price.
Last week, SK hynix said it was accelerating production of HBM3E products to achieve growth of more than 300%. The company also said it plans to begin mass production of next-generation 12-layer HBM3E chips in the current quarter and begin supplying them to customers in the fourth quarter.
Separately, Micron Technology announced earlier this year that Nvidia has approved its HBM3E chip for use in the company's AI equipment. Under the attack of Micron and SK hynix, Samsung is under great pressure.
However, the analysis says Samsung has a significant advantage, namely its financial resources and production capacity. Once Nvidia's approval criteria are met, Samsung can quickly ramp up production and address the shortages that plague Nvidia and other AI supporters.
Analyst Silverman said: "Micron and Hynix do not currently have the capacity to support the entire market. Nvidia CEO Jensen Huang wants to encourage HBM suppliers because the market needs more supply. "Nvidia is pressuring SK hynix to increase supply, but with the launch of HBM3E and the previous generation HBM3, the available capacity is close to saturation," the people familiar with the matter said. ”
Under Jun Young-hyun's leadership, Samsung is making progress. The company has developed its own 12-layer HBM3E technology and is working to obtain approval from NVIDIA for this generation of chips, as well as 8-layer HBM3E.
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