Samsung Electronics has made progress in supplying AI memory chips to NVIDIA, as revealed during a recent earnings call. However, its chip division faced a significant decline in operating profit, earning 3.9 trillion won in the third quarter, a drop of nearly 40% compared to the previous quarter's 6.45 trillion won.
As the world's largest memory chip manufacturer, Samsung has fallen behind in capitalizing on the AI boom, a gap that rival SK Hynix has exploited to its advantage. The remarks from Samsung executives appear to be aimed at reassuring investors about the company's strategic direction.
Jaejune Kim, Executive Vice President of Samsung's memory business, stated that significant progress has been made in a critical stage of certification with NVIDIA, a key client. Samsung is now expected to sell its advanced HBM3E memory chips in the fourth quarter.
NVIDIA, a leading customer for HBM products, is highly sought after by major memory manufacturers. Though rumors in August suggested Samsung's 8-layer HBM3E chips had passed NVIDIA's tests, the company countered that quality checks were still underway.
Investors are cautious about Samsung's ability to regain its standing in the high-bandwidth memory market. Kim disclosed plans to reduce the production of traditional memory to accelerate the shift to advanced manufacturing processes. Samsung prioritizes capital expenditure on high-end products, with total chip-related spending projected at 47.9 trillion won this year. Next-gen HBM4 chip production is anticipated to start in the latter half of next year.
Greg Roh, an analyst with Hyundai Motor Securities, remarked that even if Samsung succeeds as another supplier following SK Hynix, capturing significant market share from NVIDIA remains uncertain.
Previously, Samsung Electronics' Vice Chairman, Jun Young-hyun, had apologized for underperforming projections, attributing the blame to the semiconductor division. Reports indicate that Samsung's HBM3E chips failed to meet standards set by key clients like NVIDIA, leading to lost orders.
According to Macquarie Group, Samsung might lose its status as the top DRAM supplier. Besides lagging behind SK Hynix in HBM, Samsung also trails TSMC in wafer foundry services.
