Key Points
- Samsung is expected to supply HBM3E chips to Nvidia, pending final approval.
- This move could significantly shift the HBM market dynamics, which SK Hynix currently dominates.
- Samsung’s eight-layer and 12-layer HBM3E chips are still being tested.
- Nvidia may consider Samsung’s chips to meet expected demand growth next year, potentially increasing competition in the HBM sector.
Expectations are rising over Samsung Electronics’ potential supply of fifth-generation high-bandwidth memory chips (HBM3E) to Nvidia, following a report on Wednesday that Samsung’s eight-layer HBM3E has passed Nvidia’s qualification tests.
Although Samsung denied the report, industry officials anticipate that the Korean tech giant will likely receive approval to supply its advanced memory chips to Nvidia this year. The stock market reacted positively to the news, lifting Samsung’s share price.
Samsung’s eight-layer HBM3E has reportedly passed Nvidia’s tests in its artificial intelligence (AI) processors. With this approval, Samsung and Nvidia are expected to soon finalize a supply deal, potentially commencing deliveries by the fourth quarter of this year. However, Samsung’s more advanced 12-layer HBM3E chips have yet to pass Nvidia’s tests.
Samsung has declined to comment on the report, with a company source stating it is “incorrect” and that both eight-layer and 12-layer HBM3E chips are still undergoing testing.
HBM technology vertically stacks DRAM chips to save space and power, making it a crucial component in graphics processing units (GPUs) for AI services. HBM products, particularly HBM3E chips, will soon be a significant revenue source for memory chip makers.
Nvidia’s evaluation of Samsung’s HBM chips has been closely watched within the IT industry. As the leading GPU supplier globally, Nvidia has not previously sourced HBM chips from Samsung. Instead, SK Hynix is Nvidia’s primary HBM supplier.
During its second-quarter earnings call on July 31, Samsung indicated that its HBM3E sales are expected to grow rapidly, accounting for 60 percent of total HBM sales by the fourth quarter. Kim Jae-Joon, executive vice president of Samsung’s memory chip division, mentioned that the company would begin supplying eight-layer HBM chips to clients in the third quarter and is prepared to mass-produce 12-layer HBM3E, with plans to begin supply in the second half of the year. These comments were interpreted as hints that Samsung may soon supply these chips to Nvidia.
If Samsung begins supplying its eight-layer HBM3E chips to Nvidia, it will significantly alter the HBM market landscape, which has been dominated by SK hynix. Among the world’s three main HBM suppliers—Samsung, SK hynix, and Micron—Samsung boasts the largest production capacity.
Investment & Securities analyst Song Myung-seob noted that it is too early to be certain about the approval of Samsung’s eight-layer HBM3E. However, he suggested that Nvidia, which can meet its HBM demand with SK hynix’s supply for this year, will likely consider Samsung’s chips positively to prepare for anticipated demand growth next year. It could lead to intensified competition in the HBM sector and potential oversupply. As expectations grow, Samsung Electronics shares closed at 74,700 won, up 3.03 percent from the previous day.
