Samsung set to mass-produce 12-layered HBM3E in Q2, eyes Nvidia deals

Samsung Electronics office building in Seoul [YONHAP]

Samsung Electronics plans to mass-produce 12-layered HBM3E chips in the second quarter of this year, aiming for an early lead in the next-generation premium dynamic random-access memory (DRAM) market as it competes for Nvidia's supply deal.

The Korean chipmaker's focus on the 12-layered version comes as the currently more prevalent eight-layered version is dominated by its crosstown rival SK hynix.

"The industry's first 12-layered HBM3E chips are currently shipping out sample products with a plan to begin mass production in the second half," said Kim Jae-june, vice president at Samsung Electronics in charge of the memory business, during a conference call for its earnings announcement on Tuesday.

"The eight-layered HBM3E product has already commenced early mass production and it will generate sales from the end of the second quarter at the earliest."

The Korean IT giant laid out an aggressive production expansion plan for HBM or high bandwidth memory chips, considered essential for AI processors.

"We are planning for at least a twofold increase in HBM supply in 2025 compared to this year," he said, noting that this year's volume will increase to threefold versus last year. "We are smoothly rolling out negotiations with our clients."

Samsung Electronics is aggressively playing catch-up with SK hynix in the HBM business. While SK hynix has already begun shipping the HBM3E chips to Nvidia, the dominant player in the AI accelerator market, Samsung Electronics is still in the verification process.

Nvidia CEO Jensen Huang's "Jensen approved" sign on Samsung Electronics' samples of HBM3E chips displayed at the U.S. chip giant's AI conference in March, however, has raised anticipation for some positive results.

"The 12-stacked HBM3E chips are likely to be approved within the second quarter, considering Samsung Electronics' improved process for HBM and its yield rate," said Jeff Kim, head of research at KB Securities.

"Samsung Electronics will start supplying the HBM3 and the HBM3E in the third quarter, leading their sales to account for 18 percent in DRAM sales by the fourth quarter of 2024 from nine percent in the fourth quarter of 2023."

Samsung Electronics reported a 931.9 percent surge in operating profit during the first quarter, buoyed by the chip business that finally turned to profit after four consecutive quarters of losses.

The semiconductor business logged 1.9 trillion won ($1.3 billion) in operating profit in the first three months as demand for chips — both DRAM and NAND flash — rebounded.

In its earnings announced Tuesday, Samsung Electronics said it recorded 6.6 trillion won in operating profit, a whopping 931.9 percent on-year jump, largely beating the market estimate of 5.4 trillion won compiled by FnGuide.

The figure was in line with the preliminary report announced earlier.

Its revenue came to 71.9 trillion won, 12.8 percent more than a year ago.

Its Device Solutions (DS) division, in charge of the chip business, posted 23.1 trillion won in revenue, a 68 percent on-year increase. Its profit went from a loss of 4.6 trillion won a year earlier to 1.91 trillion won in the first quarter.
The cyclical downturn in the memory chip business led the Korean chipmaker to bear nearly 15 trillion won in losses last year.

"Samsung Electronics was able to realize qualitative growth and turn to profit for the memory chip business on the back of handling demands for value-added products such as HBM, DDR5, SSD for server and UFS4.0," Samsung said in a release.

Its mobile experience (MX) division, in charge of the smartphone business, logged 33.5 trillion won in sales, a 5 percent on-year jump, as its Galaxy S24 smartphones topped with AI features sold well. Its operating profit came to 3.51 trillion won, 440 billion won less than the previous year, due to price hikes in components, the company said.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]