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Samsung Electronics has surpassed Nvidia in a version of its fifth-generation high-bandwidth memory (HBM) chip, or HBM3E, for use in its artificial intelligence (AI) processors, three sources with knowledge of the results said.
The qualification clears a major hurdle for the world’s largest memory chip maker, which has been struggling to catch up with local rival SK Hynix in supplying advanced memory chips that can handle generative artificial intelligence work.
Samsung and Nvidia have not yet signed a supply agreement for the approved eight-layer HBM3E chips, but will do so soon, with supply expected to begin in the fourth quarter of 2024, the sources said.
However, the South Korean tech giant’s 12-layer HBM3E chip has not yet been tested by Nvidia, said the sources, who declined to be named as the matter is confidential.
Nvidia declined to comment.
Samsung said in a statement to Reuters that its product testing is proceeding as planned, adding that it is “optimizing its products by working with individual customers.” It did not elaborate further.
HBM is a dynamic random access memory, or DRAM, standard first introduced in 2013 in which chips are stacked vertically to save space and reduce power consumption. HBM is a key component of AI graphics processing units (GPUs), which help process the large amounts of data generated by complex applications.
Samsung has been seeking to pass Nvidia’s tests for HBM3E and previous fourth-generation HBM3 models since last year, but struggled due to heat and power consumption issues, Reuters reported in May, citing sources.
The company has since reworked its HBM3E design to address these issues, according to people familiar with the matter.
After Reuters published an article in May saying its chips failed Nvidia’s tests due to heat and power consumption issues, Samsung said the claim was untrue.
“Samsung is still playing catch-up in HBM,” said Dylan Patel, founder of semiconductor research firm SemiAnalysis.
“While they will start shipping 8-layer HBM3E in the fourth quarter, their competitor SK Hynix is also racing to ship 12-layer HBM3E.”
Samsung Electronics shares closed up 3.0% on Wednesday, outperforming the broader market’s 1.8% gain. SK Hynix closed up 3.4%.
The latest test approval comes after Nvidia recently certified Samsung HBM3 chips for use in less-sophisticated processors developed for the Chinese market, Reuters reported last month.
Nvidia’s approval of Samsung’s latest HBM chip comes as demand for sophisticated GPUs continues to soar as the generative AI craze takes off, and Nvidia and other AI chipset makers are scrambling to meet that demand.
Research firm TrendForce said HBM3E chips are likely to become the mainstream HBM products on the market this year, with shipments concentrated in the second half of the year. Leading manufacturer SK Hynix estimates that overall demand for HBM memory chips could grow 82% annually through 2027.
Samsung predicted in July that HBM3E chips would account for 60% of its HBM chip sales by the fourth quarter, a goal many analysts say could be achieved if its latest HBM chips receive final approval from Nvidia by the third quarter.
Samsung does not disclose revenue details for specific chip products. A Reuters survey of 15 analysts showed that Samsung’s total DRAM chip revenue in the first half of this year is expected to be 22.5 trillion won (about 16.4 billion U.S. dollars), and some analysts said about 10% of it may come from HBM sales.
There are only three major HBM manufacturers – SK Hynix, Micron (MU.O), opens new tab and Samsung.
SK Hynix has been Nvidia’s main HBM chip supplier and supplied HBM3E chips to an unnamed customer in late March. Sources have previously said the chips were shipped to Nvidia.
Micron also said it will supply HBM3E chips to Nvidia.
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