Nvidia Nears Certification Of Samsung's AI Chips As Market Rivalry With SK Hynix Surges

Nvidia Corp. NVDA is finalizing the certification process for Samsung Electronics Co Ltd's SSNLF high-bandwidth memory (HBM) chips, a critical step that is necessary before the Korean firm can supply components crucial for training AI platforms.

During a briefing at Computex in Taipei, Chief Executive Officer Jensen Huang revealed that Nvidia is currently evaluating HBM chips from Samsung and Micron Technology Inc. MU.

For these companies to compete with Korean chip supplier SK Hynix Inc, Nvidia's approval is essential, reported Bloomberg.

SK Hynix has seen a stock surge as it supplies Nvidia with advanced HBM3 and HBM3e chips.

Samsung trails behind its smaller rival in the HBM market, which has surged due to the growing demand for training AI models like ChatGPT.

Despite not failing any qualification tests, Samsung's HBM product requires additional engineering work, according to Huang.

"We just have to do the engineering. It's just not done," he said. "I want it to be done by yesterday. But it's not done yet. We have to be patient."

Following Huang's comments, Samsung's shares rose by as much as 4.1% in after-hours trading in Seoul.

Also Read: Nvidia To Remain As A Benchmark For Computing Industry And Spur Demand, Say Analysts

Investors are worried about Samsung's ability to catch up with SK Hynix, which has reported its fastest revenue growth since 2010.

This concern has contributed to Samsung's recent leadership change in its semiconductor division, highlighting its commitment to regaining its competitive edge.

Samsung has initiated mass production of its latest eight-layer HBM3E and plans to produce 12-layer versions by the second quarter.

The company aims to triple its HBM supply in 2024 compared to the previous year. Concurrently, SK Hynix is expanding, investing approximately $14.6 billion in a new South Korean complex and $4 billion in a packaging facility in Indiana, its first in the U.S.

As SK Hynix's production capacity is nearly booked through next year, Nvidia stands to gain from having a robust alternative supplier in Samsung.

Nvidia stock gained over 195% in the last 12 months. Investors can gain exposure to the stock via VanEck Semiconductor ETF SMH and Grizzle Growth ETF DARP.

Price Action: NVDA shares are trading lower by 0.12% at $1,148.21 at the last check on Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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