Samsung Electronics in talks with Nvidia to supply next-generation HBM4 chips

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By Heekyong Yang and Hyunjoo Jin

SEOUL (Reuters) -Samsung Electronics said on Friday it is in “close discussion” to supply its next-generation high-bandwidth memory (HBM) chips, or HBM4, to Nvidia, as the South Korean chipmaker scrambles to catch up with rivals in the AI chip race.

Samsung, which plans to market the new chip next year, did not specify when it aims to ship the latest version of its HBM chip, a key building block of artificial intelligence chipsets.

Local rival SK Hynix, Nvidia’s top HBM chip supplier, on Wednesday said it aims to start shipping its latest HBM4 chips in the fourth quarter and expand sales next year.

Nvidia, in a statement announcing cooperation with Samsung, said it is in “key supply collaboration for HBM3E and HBM4”, without elaborating.

In a separate deal, Samsung said it will purchase 50,000 high-end Nvidia chips to build an AI-enhanced semiconductor factory aimed at improving chip manufacturing speed and yields.

Samsung’s share price rose as much as 4.32% after the announcements.

Chairman Jay Y. Lee and Nvidia CEO Jensen Huang met over fried chicken and beer on Thursday during Huang’s visit to Korea to attend the Asia-Pacific Economic Cooperation CEO Summit.

Lee said Nvidia is a key customer and strategic partner and highlighted more than two decades of collaboration.

Jeff Kim, head of research at KB Securities, said HBM4 likely needs further testing but Samsung widely is seen to be in a favourable position given its production capacity.

“If Samsung supplies HBM4 chips to Nvidia, it could secure a significant market share that it was unable to achieve with previous HBM series products,” Kim said.

Samsung has been slower to capitalise on the AI-driven memory chip boom, leading to weaker earnings performance and a reshuffle of its chip division last year. Its earnings recovered in the latest quarter driven by conventional memory chip demand.

This week it said it sells its current-generation HBM3E chips to “all related customers”, indicating it has joined rivals in supplying the latest 12-layer HBM3E chips to Nvidia.

The launch of HBM4 chips will be a major test of Samsung’s ability to regain its edge in the market, analysts said.

HBM – a type of dynamic random access memory (DRAM) standard first produced in 2013 – involves stacking chips vertically to save space and reduce power consumption, helping to process the large volume of data generated by complex AI applications.

Investors are watching for whether Samsung’s HBM4 can cut SK Hynix’s lead in advanced memory chips. The chipmaker, which also is also a leading smartphone maker, said in July it had provided HBM4 samples to customers, with plans to begin supply next year.

Samsung’s share price has risen nearly 60% since July as investors expect the chipmaker to benefit from the current uptrend in memory prices and advance in the AI race.

(Reporting by Heekyong Yang and Hyunjoo Jin; Editing by Miyoung Kim and Christopher Cushing)