Samsung Electronics Co. shares rose after news broke that a critical certification process for the company’s high-bandwidth memory (HBM) chips is underway. This significant step would allow the Korean firm to capitalize on the booming demand for AI technologies. The stock gained as much as 3.6% in early Wednesday trading in Seoul.
Before this uptick, Samsung’s shares had dropped about 4% this year, trailing leading chip players. A recent announcement confirmed that Samsung and Micron Technology Inc. are undergoing examination for their HBM chips.
Certification is essential before either can directly compete with SK Hynix Inc., whose share price has soared since it began supplying advanced HBM3 and HBM3e chips. Despite initial setbacks in gaining approval for its [eight-layer] HBM3e, we are quite optimistic about approval in the next two to three months,” said Sanjeev Rana, an analyst at CLSA Securities Korea. Samsung has fallen well behind its smaller rival in that market, which has experienced explosive growth because the chips are used for training artificial intelligence models like ChatGPT.
While Samsung hasn’t failed any qualification tests, a company representative noted that its HBM product needed more engineering work. “We just have to do the engineering. It’s just not done,” they said during a briefing at Computex in Taipei.
Samsung progresses on HBM certification.
“I want it to be done by yesterday. But it’s not done yet.
We have to be patient.”
SK Hynix’s stock slid as much as 2.3% on Wednesday. Comments at the briefing suggested that Samsung was grappling with heat and power consumption issues in its HBMs, which were designed to work with AI accelerators. “There’s no story there,” the representative said when asked directly about those reports.
Investors have been concerned about Samsung’s response to SK Hynix, which recently reported its fastest pace of revenue growth since at least 2010. The growing rift is considered one of the key factors behind Samsung’s recent decision to replace the head of its semiconductor division, an unusual step signaling to investors the company’s resolve to make up lost ground. By contrast, SK Hynix’s production capacity for such chips is almost fully booked through next year, creating a potential opportunity if a strong alternative supplier emerges.
If Samsung can supply the next-gen HBM, then it would help the industry,” said Masahiro Wakasugi, a technology analyst with Bloomberg Intelligence. Samsung — the world’s largest producer of memory chips overall — says it has already begun mass production of its latest HBM product, the eight-layer HBM3E, and plans to mass-produce 12-layer versions in the second quarter. The company expects its supply of HBM to increase by at least three times in 2024 compared to last year.
Samsung also collaborates with Advanced Micro Devices Inc., which competes in AI chips. “With improving visibility on imminent supply to major AI chipmakers in the second half of 2024, we anticipate a relief rally in its shares,” said Rana of CLSA.
