Samsung Electronics to supply HBM3 to Nvidia

Samsung Electronics will supply its high-bandwidth memory 3 (HBM3) chips to Nvidia from as early as next month, setting a major milestone for its advanced memory chip business which had faced recent threats from its domestic rival SK hynix.

Samsung's HBM chip [SAMSUNG ELECTRONICS]

Samsung Electronics will supply its high-bandwidth memory 3 (HBM3) chips to Nvidia from as early as next month, setting a major milestone for its advanced memory chip business which had faced recent threats from its domestic rival SK hynix.

The news lifted Samsung Electronics shares by 6.13 percent, logging the highest increase since January 2021. The shares closed at 71,000 won ($53.85) Friday.

“We expect Samsung to begin supplying HBM3 to Nvidia from the fourth quarter after continued discussion to supply the advanced memory chips used for Nvidia’s AI GPUs,” Peter Lee, a semiconductor analyst from Citigroup said in a report issued Aug. 31.

The report said Samsung started shipping out HBM3 chips in the second quarter and is now in the verification phase, expected to finish in the third quarter.

“Given Samsung’s HBM3 qualification schedule as well as our recent market checks, we expect Samsung to begin supplying HBM3 to Nvidia from the fourth quarter of 2023.”

HBM3 is an advanced type of memory chip that stacks dynamic random access memory (DRAM) chips vertically to enable faster data processing with lower energy consumption. It has become a quintessential part of AI processors, as AI applications like ChatGPT require the processing of a large amount of data all at once.

SK hynix, Korea’s second-biggest memory chipmaker, has been leading the high-performance memory chip market until now, known to be the sole mass producer of HBM3 chips supplied to Nvidia.

It recently initiated with Nvidia the verification of HBM3E, an extended version of the HBM3, with the goal of mass producing it by the first half of next year.

Samsung Electronics was lagging behind in the market, unable to penetrate Nvidia, which controls 90 percent of the AI graphics processing unit (GPU) market, until now.

If Samsung’s HBM3 chips qualify for Nvidia’s AI processor, it would go head-to-head with SK hynix in the highly profitable yet niche market.

SK hynix commanded 50 percent of the HBM3 chip market in 2022, according to TrendForce data, with Samsung trailing behind at 40 percent.

In 2023, SK hynix is estimated to account for around 46 percent of the market, on par with Samsung, the market tracker said. Samsung’s HBM3 began mass production from the first half of this year. The next generation known as HBM3P is scheduled for later this year.

Samsung did not confirm the news.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]