Samsung Secures Major Client, Restores Prestige in Both Memory and Non-Memory Sectors

Passed Nvidia's Qual Test
Two Years of Struggle for HBM Supply Approval
Vice Chairman Jun Younghyun’s Bold Strategy Pays Off
DS Division Achieves 33.1% Sales Growth in Q3
HBM Shipments Expand in Global Market
Boom in DRAM and Othe

Samsung Electronics has broken down what once seemed like an insurmountable wall with Nvidia, marking a new chapter for its high bandwidth memory (HBM) business. By securing Nvidia, a major player that releases new artificial intelligence (AI) chips annually, as a regular customer, Samsung’s memory business is seen as having gained significant momentum.

According to the semiconductor industry on October 30, it took Samsung Electronics about two years to gain Nvidia’s confidence in its technology and receive product supply approval through a quality test (qualification test). Although Samsung started HBM development somewhat later than its competitors, the company sent HBM3 and HBM3E products to Nvidia in 2023 and worked to pass the qualification test. In February last year, Samsung became the first in the industry to develop a 36GB HBM3E 12-stack product and sent samples to Nvidia. However, Samsung’s HBM products revealed defects in yield and heat generation, failing to win Nvidia’s favor. In response, Samsung made a bold move by appointing Vice Chairman Jun Younghyun, who has a technical background, as a troubleshooter for the Device Solutions (DS) division. In July last year, Jun established a dedicated HBM team and focused on entering Nvidia’s supply chain. He also endured the pain of a complete overhaul, rebuilding the DRAM design process, which forms the foundation of HBM production, from scratch. It is reported that Jun frequently visited Nvidia from the end of last year, bringing DRAM and HBM samples tailored to Nvidia’s requirements and persuading the management team.

After two years of quality verification and efforts to expand cooperation, Samsung’s Device Solutions (DS) division achieved its highest-ever quarterly results. The DS division recorded sales of 33.1 trillion won and operating profit of 7 trillion won. Industry analysts attribute this performance to simultaneous improvements in both the memory and non-memory sectors. Memory profitability improved significantly due to rising prices and increased demand for key products such as HBM and DRAM. In contrast, non-memory operations saw a recovery, with quarterly losses narrowing from nearly 2 trillion won. As a result, Samsung restored a growth structure where both memory and foundry (semiconductor contract manufacturing) businesses expand together, reinforcing its foundation as a comprehensive semiconductor company. Kim Woonho, a researcher at IBK Investment & Securities, commented on Samsung’s third-quarter results, stating, "The DS division led the improvement in performance." He analyzed that higher prices driven by increased demand for DRAM and solid-state drives (SSD), as well as expanded HBM shipments, were the main factors behind the rise in operating profit. He also estimated that operating profit in the non-memory sector, including foundry, increased by about 1.5 trillion won compared to the previous quarter.

Samsung’s memory business benefited not only from supplying HBM3E to Nvidia but also from the overall boom in the global memory market. As investments in AI data centers surged, demand for general-purpose DRAM and NAND flash products increased rapidly, leading to a rise in prices. The simultaneous arrival of memory replacement cycles for key devices such as smartphones, PCs, and data center servers also contributed to expanding demand. On the other hand, as supply could not keep up with demand, the memory market entered a phase of excess demand. Industry experts believe that this market environment worked in Samsung’s favor, resulting in improved profitability.

The actual Samsung Electronics HBM3E 12-stack product signed personally by CEO Jensen Huang at the Nvidia GTC 2024 event last March. Photo by Hanjinman, then Head of Samsung Electronics America SNS

In the third quarter, Samsung Electronics regained its market share in the memory sector. According to Counterpoint Research, Samsung reclaimed the top spot with sales of 19.4 billion dollars, surpassing SK Hynix’s 17.5 billion dollars. Samsung’s DRAM market share also reached 34%, narrowing the gap with SK Hynix (35%) to just 1 percentage point.

Samsung’s foundry business also showed signs of recovery, driven by new orders from global companies. The company participated in the production of Tesla’s next-generation autonomous driving AI chips, AI5 and AI6, securing contracts worth about 23 trillion won, and is currently supplying image sensors (CIS) for Apple’s iPhones. The Exynos 2600, developed with a 2-nanometer process, is scheduled to be installed in the Galaxy S26 series next year. Kim Jeonghoe, Vice Chairman of the Korea Semiconductor Industry Association, said, "While global companies’ foundry orders may have been partly motivated by a desire to counter TSMC’s monopoly, it is unlikely that this was the sole reason for the contracts. Recent improvements in Samsung Foundry’s production capabilities and a certain degree of trust in those capabilities likely made these contracts possible."

This content was produced with the assistance of AI translation services.