Samsung CXL to Revolutionize AI Semiconductor Market... NeoSem Expected to Become the 'Second Hanmi Semiconductor'

Samsung Electronics Files Trademark for Next-Generation Technology 'CXL' Following HBM
CXL Enables Infinite Memory Expansion... Compatible with All CPUs
Hanmi Semiconductor, Jeju Semiconductor Increase Value with AI Semiconductor Technology

The Philadelphia Semiconductor Index in the United States has been on a rising rally, revitalizing investment sentiment toward the domestic semiconductor sector. This year, AI semiconductor-related stocks have surged in the domestic stock market, sparking active movements to identify next-generation AI semiconductor technology-related stocks.

The next-generation memory technology, Compute Express Link (CXL), is gaining attention as a technology that could overturn the market landscape following high-bandwidth memory (HBM). As demand for AI chips has recently exploded, Samsung Electronics, which had been sluggish in the HBM market, plans to secure a leading position with CXL technology and continue its super-gap strategy. This field is also attracting global chip design companies such as SK Hynix, Intel, AMD, and Nvidia. The strong stock performance of Neosem, which developed related equipment early on, is seen as a background for this trend.

The market capitalization of Hanmi Semiconductor, a representative beneficiary of HBM, jumped fivefold from 1.1 trillion won at the end of last year to 5.7 trillion won. With expectations that the 'on-device AI' era, which equips AI in personal devices including smartphones, is approaching, Jeju Semiconductor's stock price tripled in just over a month. Taesung's stock price has also been soaring daily amid news that the activation of on-device AI is increasing demand for high-performance premium substrates.

Since OpenAI released ChatGPT in November last year, competition to dominate the generative AI ecosystem has intensified. As AI technology advances, the role of graphics processing units (GPUs) in data centers has become crucial. Nvidia's market capitalization surpassed $1 trillion, making it the world's largest semiconductor company. HBM, mainly used in GPUs, is a product made by stacking multiple DRAM chips vertically. It processes data much faster than conventional DRAM and has emerged as an essential chip for building AI systems.

According to the financial investment industry on the 13th, Neosem's stock price rose about 11% this month. The stock surged as expectations of benefits spread following attention to CXL technology the previous day. There is growing anticipation that the company will benefit from the expanding AI semiconductor market.

Researcher Lee So-jung from Sangsangin Securities explained, "Neosem is the global market leader in solid-state drive (SSD) inspection equipment," adding, "Sales of the new Gen5 SSD product are increasing significantly, and growth is expected to continue next year."

Neosem, which possesses outstanding technology in the SSD inspection field, has successfully secured technological capabilities to grow rapidly in the AI era. Seeing the growth potential of the CXL market, it has developed inspection equipment and is supplying it to customers. Last year, it commercialized the world's first CXL DRAM inspection equipment and is continuously advancing related technologies through steady R&D. According to Neosem's quarterly report, it developed the DC-Tester CXL(2.0)-DRAM inspection equipment. It is developing next-generation standard memory and storage inspection equipment. Some developed products have been delivered to customers, with expectations of market preemption effects. This aligns with Samsung Electronics' development of CXL DRAM.

Neosem specializes in SSD and MBT (Monitoring Burn-in Tester) inspection equipment. SSD inspection equipment distinguishes between good and defective SSD devices. MBT applies harsh conditions to large quantities of semiconductor components to inspect for good and defective units. The SSD market is rapidly growing due to increased data center investments driven by the expansion of generative AI and streaming industries. Up to the third quarter of this year, Neosem recorded sales of 76.1 billion won and operating profit of 6 billion won, surpassing last year's sales of 74.7 billion won.

In 2021, Neosem succeeded in developing and commercializing the world's first 5th-generation SSD inspection equipment. Development of next-generation Gen 6 equipment is also underway. With the expansion of PCIe 5.0-based SSDs, demand for Gen 5 SSD testers is expected to increase. PCIe 5.0 is suitable for server and data center environments where fast data access is critical for efficient operation due to the rapid increase in data to be processed by AI and other applications. With the resumption of server investments, existing data center HDD storage is expected to continue transitioning to high-performance and large-capacity SSDs. Worldwide data centers have facilities valued at about $1 trillion. As the industry transitions to accelerated computing and generative AI, it has entered a mid- to long-term growth phase.

Researcher Oh Hyun-jin from Kiwoom Securities said, "Gen5 SSD inspection equipment is based on Intel's Sapphire Rapids inspection equipment," adding, "It is understood to have higher compatibility and efficiency compared to competitors' equipment." He further noted, "It has passed quality tests for Gen5 SSD inspection equipment targeting the largest domestic semiconductor companies," and predicted, "Through customer diversification, it will share high growth potential when the industry improves."

Although the AI era with exploding data has begun, existing computing standards (PCIe) limit the free installation of DRAM modules and physical expansion is difficult. In existing server systems, the average maximum number of DRAM modules that can be installed per CPU is 16. This poses limitations in processing large-scale data such as AI and machine learning, which are increasing exponentially. CXL has emerged as a technology to process large volumes of data without bottlenecks in the limited physical space where CPUs, GPUs, and DRAMs can be installed in PCs and other devices.

CXL can expand the DRAM required for servers to almost 'infinite,' reducing data bottlenecks and improving power efficiency. Not only global chip design companies such as Intel, AMD, and Nvidia but also leading IT companies like Microsoft, Meta, Google, and Huawei have formed an organization called the 'CXL Consortium' to actively discuss standardization and potential applications.

According to Yole Group, the global CXL market is predicted to reach $15 billion (approximately 20.1 trillion won) by 2028. Currently, less than 10% of CPUs are compatible with the CXL standard, but it is expected that after 2027, all CPUs worldwide will be designed to interoperate with CXL.

Samsung Electronics, which struggled somewhat in the HBM market, is actively pursuing a leading position in the CXL market. In May, it developed the industry's first CXL DRAM supporting CXL 2.0. Samsung Electronics is collaborating with Intel to develop CXL DRAM and has established a strategy to further expand the 'memory super-gap' by consecutively releasing related product trademarks.

SK Hynix is also intensifying efforts to secure technology leadership by releasing CXL DRAM modules made with the latest DRAM standard, DDR5 products.

Researcher Kim Dong-won from KB Securities forecasted, "AI server shipments will reach 1.68 million units next year, a 38% increase from 1.22 million units this year," adding, "The proportion of AI servers in total servers will also expand from 9% this year to 12% next year." He emphasized, "The annual growth rate of AI server shipments will be 36% until 2027, more than three times the 10% growth rate of general servers."

The largest shareholder, CEO Yeom Dong-hyun, and related parties hold 59.74% of shares. The company also holds 5.53% of treasury stock. Based on stable management rights, it continues to invest in research and development. Conversion of convertible bonds (CB) issued in 2021 into common stock is ongoing. The company disclosed the exercise of warrants worth 3 billion won the previous day. On the 26th, 846,023 shares will be listed.