Image Source: Unsplash

Samsung Electronics Co., Ltd. is facing a significant setback as its latest high bandwidth memory (HBM) chips have reportedly failed to pass Nvidia Corporation’s (NVDA) rigorous testing process.

The issues, which include heat and power consumption problems, affect Samsung’s HBM3 and HBM3E chips, the latter of which was introduced this year. The South Korean tech giant has been attempting to satisfy Nvidia’s requirements since last year, as the American multinational technology company commands around 80% of the global GPU market for AI applications.

Meeting Nvidia’s stringent standards is crucial for HBM manufacturers’ reputation and profit growth. The news of Samsung’s test failures, reported in April for its 8-layer and 12-layer HBM3E chips, caused the company’s shares to fall by 2%. As a result, competitors SK Hynix Inc. and Micron Technology, Inc. (MU) are now poised to gain a larger share of the HBM market.

Demand for HBM is High Driven by Generative AI Boom
 

High-bandwidth memory (HBM) is a dynamic random access memory (DRAM) type in which chips are vertically stacked to save space and reduce power consumption. Initially produced in 2013 to improve the performance of graphics accelerators, HBM has become increasingly crucial in processing massive amounts of data for AI applications and high-performance computing.

The generative AI boom has significantly increased the demand for sophisticated GPUs, further driving the need for high-performance memory solutions like HBM.

The three main companies producing HBM chips are Samsung, Micron Technology, and SK Hynix. While Samsung aims to begin mass production of its HBM3E chips in the second quarter and is working to optimize its products through close collaboration with customers, its competitors have already made significant strides.

SK Hynix began supplying HBM3E to Nvidia in late March, and Micron has also announced plans to supply Nvidia with its own HBM3E products.

Micron Technology Stock Up Premarket
 

As Samsung’s stock closed in decline, Micron Technology, Inc. saw gains in premarket trading on Friday. The company closed at $126.27, with a market cap of $139.83 billion and impressive returns over the past five years.

Micron recently announced HBM3E memory products with significant power efficiency improvements and is targeting greater market share with the next industry standard, HBM4, expected by 2026.

Despite the positive outlook, Micron has been involved in a $445 million patent trial verdict favoring Netlist, Inc. However, the company remains focused on its HBM product development and securing a larger portion of the growing AI and high-performance computing markets.

More By This Author: