Samsung Electronics Co. SSNLF has made substantial progress in the production of memory chips crucial for the artificial intelligence market, with its new high-bandwidth memory chip being approved by Nvidia Corp. NVDA, closing the gap with its competitor, SK Hynix Inc.
What Happened: Samsung has made significant strides in the development of its high-bandwidth memory (HBM) chips, a key component for AI technology, reported Bloomberg.
The company has obtained approval from AI giant Nvidia for its HBM3 chips and is expected to secure approval for the next generation, HBM3E, in the next two to four months.
These advancements come after a series of setbacks, including development missteps that allowed SK Hynix to take a significant lead in the fast-growing sector. This led to the replacement of the head of Samsung’s semiconductor division in May.
"We've never seen Samsung in this position," said Jim McGregor, an analyst at Tirias Research. "The industry and Nvidia more than anyone need Samsung, but they need Samsung to be firing on all cylinders."
"Investors' perception on Samsung could change soon," wrote Morgan Stanley analysts Shawn Kim and Duan Liu in a research report. "Things are improving quickly."
Analysts believe that these recent achievements could position Samsung to capitalize on the rising demand for AI products. The HBM market is projected to grow from $4 billion in 2023 to $71 billion in 2027.
"Samsung is late, but the window of HBM3E will remain open for Samsung to catch up," wrote the analysts, led by Mark Li.
Why It Matters: Samsung’s recent approval from Nvidia marks a significant milestone in the competitive AI memory chip market. This development follows Nvidia’s decision to use Samsung’s HBM3 chips in its AI processors for the Chinese market.
This approval is crucial as it represents the first time Nvidia has endorsed Samsung’s HBM3 chips, albeit for a less advanced GPU designed to comply with U.S. export controls.
The backdrop of this development includes China’s push for tech giants to reduce reliance on foreign chips, including those from Nvidia, and increase purchases of domestic AI chips.
The Chinese government has urged major tech companies like Alibaba and Baidu to balance their chip purchases between foreign and domestic suppliers.
Furthermore, Nvidia’s market value has surged, driven by the growing demand for AI chips. A prominent tech investor predicted that Nvidia could be worth nearly $50 trillion in a decade.
Additionally, Nvidia is developing a new version of its flagship AI chip for the Chinese market to comply with U.S. export restrictions.
Read Next:
Image Via Shutterstock
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
