Jensen Huang, co-founder and chief govt officer of Nvidia Corp., throughout a information convention in Taipei, Taiwan, on Tuesday, June 4, 2024. Nvidia continues to be engaged on the certification course of for Samsung Electronics Co.’s high-bandwidth reminiscence chips, a remaining required step earlier than the Korean firm can start supplying a element important to coaching AI platforms.
Annabelle Chih | Bloomberg | Getty Photos
When Samsung reported fourth-quarter preliminary revenue that missed market forecasts in a giant approach, its inventory rose.
Traders put apart the numbers and as an alternative targeted on feedback from Nvidia CEO Jensen Huang, giving hope of a revival for Samsung in 2025.
It comes after a near-$162-billion market cap wipeout for Samsung in 2024 pushed by one main issue: the view that the tech big had thus far missed out on the AI growth which has boosted different tech firms throughout the board.
Samsung’s share worth rise following Huang’s feedback — regardless of disappointing earnings — underscores how its success this 12 months might hinge on Nvidia, whose CEO has proved on numerous events that his phrases have the facility to maneuver markets.
Samsung declined to remark when contacted by CNBC.
Samsung’s challenges
Samsung was as soon as the dominant participant in reminiscence, a sort of semiconductor used to retailer knowledge that may be present in gadgets like laptops and smartphones.
Whereas the South Korean titan is called a significant participant in client electronics, which does kind a giant a part of its enterprise, the majority of its revenue comes from semiconductors, and specifically the sale of reminiscence.
Nonetheless, reminiscence costs have been depressed amid sluggish demand which has weighed on Samsung’s profitability. The corporate stated working revenue for the quarter ended Dec. 31 can be round 6.5 trillion received ($4.47 billion), lacking LSEG estimates of seven.7 trillion received.
Why Nvidia issues for Samsung
Nvidia chips and techniques go into knowledge facilities the place they’re used to coach large synthetic intelligence fashions resembling these developed by OpenAI.
A part of Nvidia’s techniques require a element referred to as high-bandwidth reminiscence, or HBM. This subsequent era of reminiscence includes stacking a number of dynamic random entry reminiscence (or DRAM) chips.
With Samsung’s main place in conventional reminiscence, many had thought the corporate can be a key provider to Nvidia and play a significant position within the AI growth.
That — thus far — has not come to go.
Samsung has fallen behind long-time rival SK Hynix in HBM, with analysts previously telling CNBC that this was resulting from Samsung’s underinvestment within the expertise.
SK Hynix is Nvidia’s prime provider of HBM and Nvidia has not licensed Samsung’s HBM for use in its newest merchandise.
Nonetheless, Nvidia’s Huang advised reporters final week that he was certain Samsung might redesign its HBM to fulfill the corporate’s necessities.
“I’ve confidence that Samsung will succeed with HBM reminiscence. I’ve confidence like tomorrow is Wednesday,” Huang reportedly stated, in line with media outlets at his press briefing.
Huang’s backing of Samsung despatched shares larger; thus far in January, they’re round 1.7% larger.
“Samsung’s success in 2025 hinges on NVIDIA qualification,” MS Hwang, analysis director at Counterpoint Analysis, advised CNBC by e-mail.
Samsung redesign shut?
Chip companies are specializing in growing the efficiency of their semiconductors whereas lowering energy consumption.
Huang’s didn’t develop on the precise elements of Samsung’s HBM that want a redesign however Counterpoint’s Hwang stated Samsung was shifting its focus from “chip dimension or value to manage energy consumption or warmth.”
“Altering course of platform takes years, however the inflection level is predicted to be in 2025,” Hwang added.
Whereas Huang stated he expects Samsung to achieve its Nvidia qualification — and comparatively rapidly — Kazunori Ito, director of fairness analysis at Morningstar, famous that the Nvidia CEO’s feedback did not give any indication of a timeline for the redesign and certification.
As an alternative, it could be a ploy from Huang to achieve leverage over Nvidia’s different HBM suppliers, Ito stated.
“NVIDIA CEO Jensen Huang talked about at CES that it’ll not take lengthy for Samsung to revamp HBM and [be] licensed, however I imagine this solely exhibits NVIDIA’s intention so as to add Samsung to the HBM provider record to get extra provide and pricing energy over suppliers,” Ito advised CNBC by way of e-mail.
“His feedback haven’t modified a lot over the previous few months, so it’s arduous for us to evaluate the timeline.”
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