Samsung Electronics, SK hynix join AI chips competition

SK hynix Inc.’s HBM3. [Courtesy of SK hynix]

The global market for artificial intelligence (AI) chips is expected to gain momentum, with the planned launch of AI chips by U.S. semiconductor company Advanced Micro Devices Inc. later this year.

According to industry sources on Wednesday, AMD Chief Executive Officer Lisa Su on Tuesday announced the company’s plans to ramp up production of its flagship MI300 AI chips from the fourth quarter. Su said customer interest in the MI300 series chips is “very high.”

AMD’s AI chips to be released in the fourth quarter are to compete with Nvidia Corp.’s graphics processing units (GPUs).

The increasing demand for AI servers worldwide, driven by the popularity of generative AI ChatGPT, has led to a surge in GPU demand, which is currently dominated by Nvidia, a U.S. multinational technology company that holds more than 80 percent of the GPU market for AI servers.

AMD’s entry into the market is expected to open up the GPU market, reigniting a fierce competition between Samsung Electronics Co. and SK hynix Inc. for high bandwidth memory (HBM), which is essential for AI chips.

HBMs and GPUs are inseparable.

HBM is a high-performance memory product that connects dynamic random access memory (DRAM) chips vertically to speed up data processing compared to conventional DRAM. GPUs must be equipped with HBM.

HBM is known to be more than six times more expensive than conventional DRAM, making it highly profitable.

Market research firm TrendForce Corp. projected that the competition in the AI accelerator chip market will intensify as cloud server providers in North America and China are conducting AI chip-related verifications.

The global HBM market is expected to grow to $6.32 billion in 2028 from $2.04 billion this year, according to another market research firm Mordor Intelligence.

For now, industry observers believe that SK hynix is ahead of Samsung Electronics in HBM technology.

SK hynix was the first in the industry to launch HBM in 2013 and has been working with Nvidia ever since, especially after the company’s HBM3 started to be used in the Nvidia H100, which is now considered a standard in the GPU market.

There are mixed views on Samsung Electronics’ competitiveness in the HBM market.

Eugene Investment & Securities Co. pointed out in a recent report that Samsung Electronics’ once overwhelming competitiveness and distinctiveness in new technologies and new growth areas, such as Double Data Rate 5 (DDR5) and HBM, have weakened.

Samsung Electronics plans to narrow the gap with SK hynix by mass-producing HBM3 this year and introducing 2.5-dimensional or 3-dimensional packaged products that combine high-performance memories like HBM.

Industry watchers expect Samsung Electronics to supply its HBM to AMD’s MI300.

“Samsung will cooperate with AMD as a contender to SK hynix and Nvidia,” said a semiconductor industry insider.

As competition heats up, Samsung Electronics and SK hynix are also jockeying for market share. According to TrendForce, SK hynix had a 50 percent market share in the HBM market last year, Samsung Electronics 40 percent, and U.S. Micron Technology Inc. 10 percent.