With Samsung winning the position of a competitor against SK Hynix, Nvidia will have more options when it comes to chip supply and stop relying on SK Hynix as a sole provider.
South Korean multinational electronics giant Samsung Electronics Co has reportedly won the right to supply advanced memory HBM3 chips to the world’s leader in artificial intelligence computing Nvidia Corp (NASDAQ: NVDA). Following the reports, Samsung saw its shares soar by 6%.
Citigroup analysts Peter Lee and Josh Yang were among the first to reveal that Samsung will start the supply of HBM3, new-generation memory chips optimized for artificial intelligence applications, for Nvidia starting from the fourth quarter of this year.
Once Samsung and Nvidia complete their work on technical verification for fourth-generation High Bandwidth Memory3 (HBM3) chips and packaging service, Samsung will handle the packaging of H100, Nvidia’s latest artificial intelligence GPU, while supplying HBM3 chips for the processor.
Citigroup analysts Peter Lee and Josh Yang wrote:
“Following its successful entry into Nvidia’s HBM supply chain, we expect Samsung to emerge as one of the leading suppliers of HBM3. We see Samsung as a long-term beneficiary of the growth of the memory and AI computing markets.”
Back in June, Nvidia started looking for ways to diversify its sourcing of high bandwidth memory (HBM3) and 2.5D packages. The company was exploring partnerships with potential suppliers. Samsung, Amkor Technology, and SPIL (Siliconware Precision Industries Ltd) were considered as options.
Until now, SK Hynix Inc. – the world’s second-largest maker of memory chips and a leading supplier of semiconductors– has been the sole supplier of HBM3 chips for Nvidia. Back in June 2022, SK Hynix became the first in the world to mass-produce the highest-performing DRAM, HBM3, seizing market leadership. It successfully supplied Nvidia’s H100 after passing stringent performance evaluations of HBM3 samples by demanding customers.
With Samsung winning the position of a competitor against SK Hynix, Nvidia will have more options when it comes to chip supply and stop relying on SK Hynix as a sole provider.
Following the news, Samsung stock closed the trading session 6.13% higher, while Hynix shares dropped by 1.48%.
AI Memory Chip Competition
Both Samsung and Hynix have been making strategic moves to strengthen their positions in the AI memory chip market as the demand for efficient and high-performance memory solutions is increasing. With Samsung’s entry into the HBM3 market, it is obvious that the company aims to get a larger share of this growing market and leverage its expertise in AI chip memory technology to support AI advancements.
Samsung is also working on advanced packaging – one of the final steps in semiconductor manufacturing. The procedure integrates different semiconductors or vertically interconnects multiple chips. Advanced packaging allows multiple devices to be merged and packaged as a single electronic device.
Currently, the leader in advanced packaging is Taiwan Semiconductor Manufacturing Co (TSMC) whose experience in 2.5D packaging technology totals more than a decade already.
By 2027, the global advanced packaging market is expected to surge by 74% to $65 billion. Therefore, the competition in the industry is extremely high.
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