Samsung Signals Progress With Nvidia on AI Memory Chips
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(Bloomberg) -- Samsung Electronics Co. declared progress in supplying its most advanced AI memory chips to Nvidia Corp., seeking to reassure to investors who fear the company is falling further behind SK Hynix Inc. in a red-hot market.
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Samsung has made “meaningful” progress during key stages of the qualification process with a major customer, a senior executive told analysts, referring to Nvidia. The Korean company now expects to sell its most advanced HBM3E memory chips in the fourth quarter, Jaejune Kim, executive vice president of Samsung’s memory business, said on an earnings call Thursday. SK Hynix’s shares fell 4.5% in Seoul, while Samsung ended largely unchanged after climbing as much as 3.6% on Kim’s comments.
Investors remain cautious about Samsung’s ability to claw its way back into the market for high-bandwidth memory chips, designed to work with Nvidia’s AI accelerators. South Korea’s largest company has struggled to get its latest products certified by Nvidia — providing an unusually long window for SK Hynix and US rival Micron Technology Inc. to carve out commanding leads in a lucrative arena.
That means Samsung has so far missed the lion’s share of profits stemming from surging artificial intelligence-related demand. It also remains exposed to weak mobile chip sales, while grappling with the rising supply of legacy chips in China. Demand for its smartphone chips is expected to stay weak next year, executives said.
“The key question is whether Samsung will be able to secure a meaningful market share from Nvidia even if it becomes another vendor after SK Hynix,” said Greg Roh, an analyst at Hyundai Motor Securities Co. “We have to wait and see.”
Profit at Samsung’s mainstay semiconductor operations missed market expectations, reflecting the Korean tech leader’s struggles to catch up in HBM and turn around its foundry business. Its semiconductor division — typically the biggest profit contributor — earned just 3.86 trillion won ($2.8 billion) in operating profit in the September quarter, shy of a 6.66 trillion won estimate.
That comes as SK Hynix posted a record operating profit of 7.03 trillion won last week with plans to supply its 12-layer HMB3E in the current quarter.
Samsung is now cutting production of its legacy memory in an effort to speed up conversion to cutting-edge manufacturing processes, Kim said. Its memory-related capital expenditures will prioritize high-end products, he said. Chip-related capital expenditures are expected to total 47.9 trillion won this year, and Samsung now expects to mass produce next-generation HBM4 chips in the second half of next year.