Samsung Electronics focuses on AI chips to secure lead

2024.02.08 14:39:01 | 2024.02.08 17:46:43

Han Jin-man, oversees the DS business in the Americas [Courtesy of Samsung Electronics]이미지 확대

Han Jin-man, oversees the DS business in the Americas [Courtesy of Samsung Electronics]

South Korean chipmaker Samsung Electronics Co. is expected to go all-out to take the lead in the next-generation artificial intelligence (AI) semiconductor market by forming a partnership with OpenAI and highlighting its status as a comprehensive chips solution provider.

According to chip market tracker TrendForce, Samsung Electronics’ DRAM market share dropped to 38.9 percent in the third quarter of 2023, narrowing the gap with SK hynix with 34.3 percent. Sales also lag behind Taiwan Semiconductor Manufacturing Co. (TSMC) and Intel Corp.

Samsung Electronics has faced ongoing challenges in securing orders for Nvidia Corp.’s AI chips, losing out to SK hynix Inc. and TSMC.

SK hynix holds exclusive supply rights for certain high bandwidth memory (HBM) chips to Nvidia, which dominates about 90 percent of the AI graphics processing unit (GPU) market. TSMC recently won the contract to produce Nvidia’s H100 GPU chips.

Industry insiders noted that Samsung Electronics could have missed the opportune timing in the AI chips market due to the legal risks involving its Executive Chairman Jay Y. Lee.

However, Lee’s acquittal from the district court, could lead a turnaround for the company in the chip market landscape, observers noted.

Samsung Electronics highlights its strengths through a turnkey strategy. Leveraging its diverse chip production capabilities, its system large-scale integration (LSI) division can design general-purpose AI chips, while the foundry business unit handles contract manufacturing. Its memory business unit supplies HBM3E chips, also known as Shine Bolt.

The company seeks collaboration with OpenAI based on its assessment that the AI company could be the optimal partner for its chip strategy.

OpenAI advocates for AI chip production to reduce reliance on Nvidia. In January, OpenAI Chief Executive Officer Sam Altman visited Seoul and met with key executives from Samsung Electronics, including Kyung Kye-hyun, head of the Device Solutions (DS) division; Lee Jung-bae, leader of the memory chip business; John Yong-In Park, head of the System LSI business; and Choi Si-young, leader of the foundry business.

Samsung Electronics underscores its status as the sole chipmaker capable of overseeing the entire chipmaking process, from design to production.

“We are the only semiconductor company that can comprehensively handle semiconductor design, memory semiconductor production, foundry, and packaging,” said a company official.

Another key strength lies in providing customer-tailored solutions through chip and package co-design.

During a recent conference call, Kim Jae-jun, vice president overseeing the memory division, highlighted its development of custom HBM products optimized for each customer by integrating logic chips.

“With synergy between our foundry business unit, System LSI business unit, and Advanced Packaging team, we aim to lead the custom HBM market,” Kim said.

Analysts have a positive view of the company’s turnkey strategy.

Kim Dong-won, an analyst at KB Securities Co., noted that Samsung Electronics could “emerge as the leader in AI turnkey solutions in 2 to 3 years,” being the only company to own all memory, foundry, and system chip businesses.

Furthermore, Samsung Electronics boasts diverse foundry production capabilities ranging from 3-to-5-nanometer advanced processes to 14-to-28-nanometer legacy processes. This diversity, coupled with lower geopolitical risks compared to TSMC, renders the company a formidable player in the semiconductor industry.

Samsung Electronics is expected to mass-produce next-generation HBM through foundry processes. During the Consumer Electronics Show 2024 held in Las Vegas in January, Han Jin-man, who oversees the DS business in the Americas, mentioned that discussion is underway for next-generation HBM (HBM4) to be mass-produced through foundry processes.

By Seong Seung-hoon and Chang Iou-chung

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