[Initial Insight] Samsung Semiconductor 50 Years, A Bold Move to Regain No.1 Position

Acknowledging Early Market Defeat in AI Semiconductors
Plan to Reverse with HBM 12-Stack Product
Industry's Only Comprehensive Semiconductor Company Advantage

Samsung Electronics returned to profitability in its semiconductor business for the first time in five quarters since Q4 2022, but recorded an operating profit approximately 1 trillion KRW less than SK Hynix. This outcome was significantly influenced by the performance in the high-bandwidth memory (HBM) sector, which is gaining attention as AI memory. HBM is an innovative memory technology used in high-performance system computers, connected to central processing units (CPUs) or graphics processing units (GPUs), enabling fast data transfer and greatly enhancing the learning and computing performance of AI servers.

Kwangho Lee, Head of the Industrial IT Division, Corporate Team

Kyung Kye-hyun, CEO of Samsung Electronics’ Device Solutions (DS) division, recently acknowledged at an internal management briefing that "we lost in the early AI market, but now we must win the next round," recognizing that the leadership in the HBM market has been ceded to SK Hynix, and urged employees to make efforts.

Samsung Electronics plans to reverse the situation by becoming the first in the industry to mass-produce the 5th generation HBM (HBM3E) 12-stack product in Q2 this year. It is expected that profitability will improve once full-scale shipments of HBM3E begin. Samsung Electronics plans to supply this product to Nvidia within the year. Earlier, Jensen Huang, CEO of Nvidia, showed great interest in Samsung Electronics’ 12-stack HBM3E sample at ‘GTC 2024’ held in San Jose, USA, leaving a signature marked ‘APPROVED.’ Although the product has not been officially approved, the industry analyzes that the HBM partnership between the two companies has become stronger. Samsung Electronics expressed confidence during its Q1 earnings conference call this year, stating, "We expect related sales of the 12-stack HBM3E product to begin as early as the end of Q2 this year."

As the AI market is rapidly growing recently, and AI technologies like ChatGPT are being applied across various industries, orders for HBM have also increased significantly. AI technology requires processing large amounts of data, making high-performance memory semiconductors essential. Accordingly, semiconductor manufacturers continue to research and develop high-performance memory to overcome the limitations of existing memory.

Professor Kwon Seok-jun of Sungkyunkwan University, author of ‘The Semiconductor Three Kingdoms,’ recently stated at the Near Foundation Forum that "the era of general-purpose memory is ending, and the era of customized memory foundries like HBM is coming," suggesting that leading this trend will be the path for the growth of the Korean semiconductor industry. The Wall Street Journal (WSJ) evaluated in an article titled ‘Don’t Count Samsung Out of the AI Memory Race’ that while SK Hynix and Micron are leading the AI memory market, Samsung Electronics is narrowing the gap by leveraging its financial and technological capabilities.

Samsung Electronics is the ‘only’ comprehensive semiconductor company capable of turnkey supply of customized AI semiconductors. It can provide integrated supply from HBM design to production and packaging. This year marks the 50th anniversary of Samsung Electronics’ semiconductor business. We look forward to Samsung Electronics’ ‘rebound’ and DS’s ‘growth year opening the future half-century’ to reclaim the world No. 1 position in semiconductors.