Samsung denies HBM test failure reports, stock plunges

Samsung Electronics' office in Seocho Destrict, southern Seoul [YONHAP]

Samsung Electronics on Friday denied reports that its high bandwidth memory (HBM) chips failed qualification tests with Nvidia due to heating and power issues.

"Samsung Electronics is proceeding smoothly with the test of the HBM chips with various global clients," the company said in an official statement Friday.

"We are running various tests to strictly verify the quality and performance of the HBM chips."

Samsung Electronics' statement follows a Reuters report earlier in the day that the company had failed qualification tests of both its HBM3 and HBM3E with Nvidia, a company that controls more than 80 percent of the market. The report cited heat and power consumption issues as the reasons behind the failure.

Samsung explained that it is in the process of optimizing the specifications of the HBM chips with its clients, as the premium memory chip requires customizations unlike legacy dynamic random access memory (DRAM) chips.

HBM, which stacks multiple DRAM chips for larger data processing, has emerged as a new battlefield for memory chipmakers in the face of an AI era where Samsung Electronics is severely struggling.

Its domestic rival SK hynix nabbed the early lead in the game, becoming the sole supplier of both HBM3 and HBM3E to the U.S. AI chip giant.

Samsung Electronics has been rolling out a full-fledged effort in order to catch up to SK hynix. It replaced the head of its chip business recently, placing Vice Chairman Jun Young-hyun in the role as part of a rare, mid-year C-suite reshuffle on Tuesday.

The market was unsettled by the news.

Samsung Electronics shares dropped by as much as 3.32 percent to 75,700 won ($55) in early trading Friday, before rebounding to 75,900 won at closing.

The news rebuts expectations that Samsung Electronics' approval by Nvidia is imminent.

In a recent developer conference, Nvidia CEO Jensen Huang identified Samsung Electronics as an "extraordinary" company and left a "Jensen approved" sign on Samsung's latest HBM chip displayed at the event.

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