Samsung Electronics opens new tab forecast demand for artificial intelligence would hold strong and tighten supply of some high-end chips, joining rivals in benefiting from a solid rebound in the battered global memory chip market.
The upbeat outlook from the world’s largest memory chip maker sent its shares 1.8% higher on Tuesday after it reported a more than 10-fold rise in first-quarter operating profit.
But so far this year Samsung shares are down 0.8%, lagging SK Hynix’s (000660.KS), opens new tab 24% gain, as it seeks to catch up with its smaller rival in the supply of top-end chips such as high bandwidth memory (HBM) to AI leader Nvidia (NVDA.O), opens new tab.
“We plan to increase supply of HBM-related chips in 2024 by more than three-fold versus last year,” Jaejune Kim, a Samsung vice president in charge of the memory division, said on an earnings call.
Samsung said it began mass production this month of the latest HBM chips for use in generative AI chipsets, called 8-layer HBM3E. It is seeking to capitalise on the AI boom that has benefited SK Hynix, which had been the sole supplier of HBM3 chips to Nvidia.
Samsung said it planned to start making the 12-layer version during the second quarter, and expected the latest HBM3E products to account for two-thirds of its HBM output by year-end.
Analysts said the targets were aggressive.
Samsung’s 8-layer HBM3E appears to be supplying Nvidia, while the 12-layer may go to AMD (AMD.O), opens new tab and Nvidia, said Jeff Kim, head of research at KB Securities.
“As Samsung’s technology is advantageous for high-stacking, while SK Hynix has its advantages in the 8-layer, there may be a segmentation where Nvidia gets 12-layer products from Samsung and most 8-layer products from SK Hynix,” Kim said.
“Samsung is working hard to improve the yield of its 12-layer product.”
Samsung did not respond immediately to a request for comment on its HBM customers.
Samsung also said it will step up offerings of high-end solid-state drive (SSD) products to meet AI server demand, and expected high-end memory chip supply to become tighter toward year-end due to capacity being focused on HBM, echoing comments from SK Hynix last week.
