Samsung Negotiates with Nvidia to Supply Next-Gen HBM4 Chips

Samsung Electronics is reportedly engaged in close discussions to provide its next-generation high-bandwidth memory (HBM4) chips to Nvidia. This strategic collaboration comes as Samsung aims to strengthen its position in the competitive AI chip market. The new HBM4 chips are expected to launch next year, although Samsung has not revealed specific shipping dates.

Market Dynamics in AI Chip Supply

Currently, local competitor SK Hynix is Nvidia’s primary supplier for HBM chips. SK Hynix announced plans to begin shipping its HBM4 chips in the fourth quarter of this year, with intentions to expand sales in 2024. Nvidia, in a recent statement, acknowledged ongoing collaborations with Samsung regarding both HBM3E and HBM4, although specifics were not disclosed.

Partnership and Investment

• Samsung intends to purchase 50,000 high-end Nvidia chips.
• This acquisition will support Samsung’s plans to enhance its AI-infused semiconductor factory.
• The goal is to improve chip manufacturing speed and output quality.

Following these announcements, Samsung’s stock price experienced a surge, increasing by approximately 4.32%. Samsung Chairman Jay Y. Lee and Nvidia CEO Jensen Huang recently met in Korea during the Asia-Pacific Economic Cooperation CEO Summit. They discussed their long-standing partnership, which has spanned over two decades.

Analysts’ Perspectives

Jeff Kim, head of research at KB Securities, highlighted that while HBM4 still requires further testing, Samsung appears to be in an advantageous position due to its production capabilities. If successful, this supply relationship could allow Samsung to capture significant market share that it lacked with earlier HBM series products.

Industry experts note that Samsung has been slower to leverage the surge in AI-driven memory chip demand, which has contributed to its recent earnings challenges. However, Samsung’s earnings showed improvement in the latest quarter, attributed to the demand for conventional memory chips. The company indicated that it has been supplying its current-generation HBM3E chips across various customer segments, signaling a competitive position in the market.

The Importance of HBM4 Launch

The forthcoming launch of HBM4 chips is viewed as a critical opportunity for Samsung to reclaim its competitive edge. HBM technology, first introduced in 2013, involves vertically stacking chips to optimize space and reduce power consumption, making it suitable for processing the vast data generated by advanced AI applications.

Investors are closely monitoring whether Samsung’s HBM4 can challenge SK Hynix’s current lead in high-performance memory products. In comparison, SK Hynix announced in July that it had already provided HBM4 samples to various clients and plans to begin volume supply next year.

Since July, Samsung’s stock has increased nearly 60%, reflecting investor optimism regarding potential gains from rising memory prices and progress in the AI sector.