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At its previous earnings call in July, Samsung has announced the ambitious goal that its HBM sales would increase three to five times in 2H24. However, as it is still struggling to pass the verification of 12-Hi HBM3e products, the company’s prospects for returning to glory in the near term seems to be rather dim.
According to a report by Korean media outlet ZDNet, the main issue may lie in the core die of HBM, while the adoption of 1a DRAM is hindering Samsung’s recent efforts to supply HBM3e for NVIDIA.
Notably, an insider cited by the report notes that Samsung’s Vice Chairman Jun Young-hyun, the new Head of Device Solutions (DS) Division, is aware of these issues, so the decision for whether to redesign the 1a DRAM or not may be made soon.
According to the report, Samsung began the mass production of 1a (4th generation) DRAM, which has a linewidth of approximately 14 nm, as early as in the second half of 2021. It is worth noting that the company tries to enhance the product’s competitiveness by actively adopting advanced technologies such as EUV (extreme ultraviolet lithography).
ZDNet notes that Samsung applied five EUV layers to its 1a DRAM, which is significantly more than the one layer used by its major competitor, SK hynix.
However, though EUV is advantageous for reducing linewidths compared to the existing ArF (argon fluoride) lithography process, which is supposed to enhance efficiency and thus lowering manufacturing costs, EUV’s high technical difficulty has negatively affected the stability of the process, according to the report.
As a result, the cost of Samsung’s 1a DRAM has not decreased as initially anticipated, according to the report, with the yield issue occurring reportedly hinders Samsung’s HBM3e verification progress with NVIDIA.
Previous reports indicate that Samsung had conducted an on-site inspection with NVIDIA regarding the 8-layer HBM3e products at its Pyeongtaek campus. While the inspection itself concluded without any issues, concerns have reportedly been raised as the data processing speed (Gbps) of Samsung’s 8-layer HBM3e is about 10% lower compared to its rivals, according to sources cited by ZDNet.
Both SK hynix and Micron utilize 1b DRAM for their HBM3e core dies, the report notes.
Therefore, industry insiders cited by ZDNet reveal that Samsung has been internally discussing the possibility of redesigning some of the circuits in its 1a DRAM.
However, If Samsung does proceed with the redesign, it is expected to take at least six months for the product to be completed, the report suggests, which means the mass production could only begin by the second quarter of next year, and it will be challenging to supply the product in a timely manner.
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(Photo credit: Samsung)
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The AI wave continues to fuel surging demand for AI chips. Following reports of HBM sellouts and manufacturers ramping up production to meet demand, recent news reveals that Nvidia’s Blackwell architecture GPUs are also in short supply.
Nvidia’s Blackwell GPUs Sold Out for the Next 12 Months
Although Nvidia’s Blackwell architecture GPUs are delayed until Q4 of this year, it hasn’t dampened orders.
According to Tom’s Hardware, Morgan Stanley recently held a three-day meeting in New York with Nvidia CEO Jensen Huang, CFO Colette Kress, and other members of the chipmaker’s management team.
Morgan Stanley reported that Nvidia stated that orders for Blackwell architecture GPUs are sold out for the next 12 months, and new customers placing orders now won’t receive products until the end of 2025.
Existing customers, including AWS, CoreWeave, Google, Meta, Microsoft, and Oracle, have already purchased all of the Blackwell architecture GPUs that Nvidia and its partner TSMC can produce in the coming quarters.
The industry points out that the demand for high-performance GPUs and the AI chip market behind them remains frenetic, and the competition between major AI chip manufacturers such as Nvidia, AMD, and Intel will become increasingly fierce.
Three Memory Giants Seize HBM3e Opportunities, Highlighting the Importance of 12hi Products
Driven by the continuous iteration of high-performance AI chips and the expansion of HBM capacity per system, the demand for HBM bits continues to grow.
At the same time, with the iteration of mainstream GPU products from Nvidia and AMD, as well as changes in HBM specifications, the market will gradually upgrade from HBM3 to HBM3e. The three major memory manufacturers will actively seize HBM3e opportunities.
According to TrendForce, the annual growth rate of HBM demand bits will be close to 200% in 2024 and will double again in 2025.
TrendForce estimates that driven by the active adoption of new-generation HBM products by AI platforms, more than 80% of HBM demand bits will be for HBM3e generation products in 2025, of which 12-hi will account for more than half, becoming the mainstream product that major AI manufacturers will compete for in the second half of next year, followed by 8-hi.
Samsung, SK Hynix, and Micron have submitted their first batches of HBM3e 12-hi samples in the first half of 2024 and the third quarter, respectively, and are currently in the continuous verification stage. Among them, SK Hynix and Micron are progressing faster and are expected to complete verification by the end of this year.
(Photo credit: Nvidia)
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Though has yet to disclose the actual progress on its 12-Hi HBM3e verification with AI chip giant NVIDIA, Samsung is rumored to lower its target for the maximum production capacity (CAPA) of HBM by the end of 2025, which echoes the speculation on delays of HBM3e mass production for key customers, according to Korean media outlet ZDNet.
It is worth noting that the struggling memory giant reportedly plans to lower the capacity target by over 10%, from the initial monthly goal of 200,000 units to 170,000 units by the end of next year, ZDNet suggests, as it now takes a relatively cautious approach to facility investment plans.
According to the report, as of the second quarter, in order to narrow the gap with competitors such as SK hynix, Samsung had planned to increase HBM production capacity to 140,000–150,000 units per month by the end of this year, and up to 200,000 units per month by the end of next year.
At the Q2 earnings call in late July, Samsung disclosed an ambitious roadmap for its HBM products. According to a previous report from Business Korea, Samsung expects the share of HBM3e chips within its HBMs to surpass the mid-10 percent range in the third quarter, and speedily grow to 60% by the fourth quarter. The company also projects its HBM sales to increase three to five times in the second half of 2024.
However, the scenario has changed a few months later. Citing a source familiar with the situation, the report by ZDNet notes that Samsung has decided to slow down the pace of facility investments due to the underperformance of its HBM business. Further discussions on investments will only proceed once its HBM3e supply for NVIDIA is confirmed, the source indicates.
According to the analysis by TrendForce, achieving stable yields for HBM3 and HBM3e 8-Hi products required at least two quarters of learning in previous generations. Based on this precedent, the learning curve for HBM3e 12-Hi is unlikely to shorten significantly, especially with the rapid market shift toward the 12-Hi version.
Furthermore, key products such as NVIDIA’s B200 and GB200, as well as AMD’s MI325 and MI350, will adopt HBM3e 12-Hi. The high cost of these systems will also demand strict stability, complicating mass production and adding another layer of uncertainty.
Ahead of its Q3 earnings call, Samsung already warned its profit would fall short of market expectations, while issuing an apology for the disappointing performance. Samsung’s operating profit for the third quarter is expected to reach 9.1 trillion won, which is below the expected 10 trillion won.
Another report by The Korea Times notes that the market expected SK hynix to see a substantial increase in operating profit driven by strong HBM demand, potentially outpacing Samsung’s semiconductor division.
To boost its competitiveness in the semiconductor industry, Samsung intends to assign research and development staff directly to its manufacturing facilities. This initiative seeks to enhance communication and collaboration with on-site production teams, according to a report by SmBom.
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(Photo credit: Samsung)
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Samsung reported its third-quarter earnings today, and according to The Korea Economic Daily, the company’s operating profit was initially expected to exceed 10 trillion won, but the actual performance fell short of that target.
Reuters also reported that Samsung Electronics warned its third-quarter profit would fall short of market expectations, issuing an apology for the disappointing performance. The tech giant has been lagging behind its rivals in supplying high-end chips to Nvidia amid the booming AI market.
The Korea Economic Daily noted that Samsung’s operating profit for the third quarter reached 9.1 trillion won, a 274.5% increase from the same period last year. However, this figure still fell significantly short of the expected 10 trillion won. Sales for the quarter amounted to 79 trillion won, up 17.2% year-on-year. The Device Solutions (DS) division, responsible for semiconductor operations, saw its performance decline compared to the previous quarter due to one-off costs, including incentive provisions.
Although demand for memory chips such as servers and high-bandwidth memory (HBM) remained stable, factors like inventory adjustments by mobile clients and increased supply of legacy products from Chinese memory manufacturers negatively impacted performance, exacerbated by one-time costs and exchange rate effects. Additionally, the weaker-than-expected recovery in demand for Samsung’s flagship conventional DRAM products, particularly due to sluggish smartphone and PC markets, further hindered its results.
In the same report by The Korea Economic Daily, it was noted that in the HBM sector, Samsung has yet to make significant progress. The commercialization of its fifth-generation HBM, HBM3E, has been delayed, with the product still undergoing quality tests by NVIDIA. However, the Device Experience (DX) division saw improved performance due to strong flagship smartphone sales, and Samsung Display benefited from new product launches by key customers.
The Korea Economic Daily highlighted that analysts had forecast Samsung’s third-quarter operating profit to surpass 10 trillion won, with sales expected to reach around 81 trillion won, but both figures missed these projections.
Before Samsung’s earnings announcement, The Korea Times had reported that the market expected SK Hynix to see a substantial increase in operating profit driven by strong HBM demand, potentially outpacing Samsung’s semiconductor division.
Regarding Samsung’s HBM3E validation, TrendForce noted in a September press release that while Samsung entered the HBM3E market later, the company recently completed validation and has begun shipping its HBM3E 8Hi units. According to TrendForce’s latest research, Samsung, SK Hynix, and Micron submitted their first HBM3E 12Hi samples in the first half and third quarter of 2024, with ongoing validation processes. SK Hynix and Micron are progressing faster and are expected to complete validation by the end of this year.
(Photo credit: Samsung)
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Is the winter really coming for the memory sector? Despite an earlier report by Morgan Stanley warning of an AI bubble, U.S. memory giant Micron reveals a financial guidance that beats market expectations, projecting its fiscal first-quarter revenue to reach USD 8.7 billion, higher than an average analyst estimate of USD 8.32 billion, Bloomberg notes.
Meanwhile, Micron expects a significant increase in gross margin to around 39.5%, and an adjusted earnings of USD 1.74 per share, exceeding analysts’ estimates of USD 1.65, according to Reuters.
The growth momentum will mainly rely on the soaring demand for HBM, driven by AI. Earlier in June, Micron noted that its HBM chips have been fully booked for 2024 and 2025.
In terms of the outlook for the overall HBM market, Micron’s view evidently contradicts with that of Morgan Stanley, as it eyes the HBM total available market (TAM) to grow from approximately USD 4 billion in 2023 to over USD 25 billion in 2025.
And the company is making strides in its progress in HBM in the following year. According to its press release, Micron expects its HBM, high-capacity D5 and LP5 solutions, and data center SSD products to deliver multiple billions of dollars in revenue in fiscal 2025.
The U.S. memory giant also expects its HBM market share to commensurate with the company’s overall DRAM market share sometime in 2025.
According to TrendForce, Micron ranked third in DRAM revenue in Q2, 2024, with a market share of 19.6%, after Samsung’s 42.9% and SK hynix’s 34.5%, respectively.
Regarding the latest development on HBM, after its 8-hi HBM3E entered mass production in February, Micron confirms that it has started shipments of production-capable HBM3E 12-hi 36GB units to key industry partners to enable qualifications across the AI ecosystem, stating that its HBM3E 12-hi 36GB delivers 20% lower power consumption than its competitors’ HBM3E 8-hi 24GB solutions while providing 50% higher DRAM capacity.
The company expects to ramp its 12-hi HBM3E in early 2025 and increase the 12-hi mix in the overall shipments throughout the year.
According to a previous report by Tom’s Hardware, the new products are reportedly designed for cutting-edge processors used in AI and high-performance computing (HPC) workloads, including NVIDIA’s H200 and B100/B200 GPUs.
Micron delivered a strong finish to fiscal year 2024, with fiscal Q4 revenue at the high end of its guidance range and gross margins and earnings per share (EPS) above the high end of its guidance ranges.
In fiscal Q4, Micron’s revenue jumped 93% YoY to USD 7.75 billion. Its earnings per share (EPS) came in at USD 1.18, a notable turnaround from the loss of USD 1.07 per share in the same period of 2023. In addition, it achieved record-high revenues in NAND and in its storage business unit.
Micron’s fiscal 2024 revenue grew over 60%, with company gross margins expanding by over 30 percentage points and achieved revenue records in data center and in automotive, according to its press release.
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(Photo credit: Micron)