Finance Association, May 24 (Editor Liu Rui) According to people familiar with the matter revealed to the media, Samsung Electronics' latest HBM chip has not passed Nvidia's tests due to heat dissipation and power consumption issues and cannot be used in the latter's artificial intelligence processor. In response, Samsung stated that it is successfully testing the supply of HBM chips with partners.

Samsung HBM chips have not passed the test

With the rise of the generative AI boom, market demand for complex GPUs soared, and so did demand for HBM.

Nvidia currently controls 80% of the global GPU market for artificial intelligence applications, so being able to pass Nvidia's tests is seen as a key to the future growth of HBM manufacturers — both in terms of corporate reputation and profit growth momentum. Failure to pass the test will shake the market position of the Samsung HBM3 chip and even the upcoming fifth-generation HBM3E chip.

Sources told the media that Samsung has been trying to pass Nvidia's tests of the HBM3 and HBM3E since last year. However, it is currently unclear whether the above cooling and power consumption problems can be easily solved.

Samsung Electronics said in a statement: “HBM is a custom memory product that needs to be optimized according to customer needs... We are working closely with customers to optimize the product.”

Jeff Kim, head of research at KB Securities, said that Samsung, as the world's largest memory chip manufacturer, originally had high expectations for it, and believed that Samsung would soon pass Nvidia's tests. However, it is natural that professional products such as HBM take some time to pass customer performance evaluations.

Although Samsung has yet to become Nvidia's HBM3 supplier, it is indeed already supplying customers such as AMD, and plans to begin mass production of HBM3E chips in the second quarter. Samsung said in a statement that its product plans are progressing as planned.

Or fall further behind in the HBM competition?

Sources said that Samsung's failure to meet Nvidia's requirements has heightened concerns in the industry and investors that Samsung may lag further behind rivals SK Hynix and Micron Technology in terms of HBM.

Samsung's main competitor, SK Hynix, is currently Nvidia's main supplier of HBM chips. SK Hynix has been supplying HBM3 to Nvidia since June 2022. In addition, the company also began supplying HBM3E to a customer who declined to be named at the end of March this year. According to the source, the shipping destination for these products is still Nvidia.

In addition, Micron, another major manufacturer of HBM chips in the world, has also indicated that it will supply the HBM3E to Nvidia.

This week, Samsung changed the head of its semiconductor division, saying it needed a new senior figure to deal with the “crisis” affecting the industry. Analysts said the move seemed to highlight Samsung's concerns about its backward position in the HBM sector.

SK Hynix first developed the HBM chip as early as 2013, and in the past 10 years, SK Hynix has invested far more time and resources in HBM R&D than Samsung Electronics, which is the reason for its technical advantages.

Samsung Electronics said in a statement: “Samsung developed the first commercial HBM solution for high-performance computing in 2015 and has been investing in the HBM field ever since.”

Downstream manufacturers also expect Samsung to catch up with SK Hynix

The source also said that GPU manufacturers such as Nvidia and AMD are eager for Samsung to improve their HBM chips, so they can have more supplier choices and reduce SK Hynix's pricing capabilities.

At the Nvidia Artificial Intelligence Conference held in March of this year, Hwang In-hoon left a “JENSEN APPROVED (JENSEN APPROVED)” signature on Samsung's 12-layer HBM3E physical products, which shows that the company is passionate about the future of Samsung supplying these chips.

According to data from research firm Trendforce, the HBM3E chip may become the mainstream HBM product in the market this year, with shipments concentrated in the second half of 2024. Furthermore, SK Hynix expects the overall demand for HBM memory chips to grow at an annual rate of 82% by 2027.

Analysts said investors have noticed Samsung's relatively weak position at HBM. The company's stock price has remained flat so far this year, while SK Hynix's shares have risen 41% and Micron's shares have risen 48%.