Samsung's Epic Entry into Nvidia's HBM3 Supply Chain

Recent reports indicate that Samsung Electronics has forged a strategic partnership within Nvidia's supply network concerning accelerator cards. This collaboration anticipates the commencement of HBM3 memory supply to Nvidia, scheduled to commence as early as October. Preceding this development, Samsung had previously confirmed its HBM3 supply commitment to AMD, potentially solidifying its position with an impressive market share of over 50% in the HBM sector by the upcoming year.

Lee Se-chul, the Executive Director of Citigroup Global Markets Securities, has affirmed, "Samsung is poised to become a prominent supplier to Nvidia, initiating from the fourth quarter of this year, thereby providing HBM3." Citigroup, recognizing Samsung's pivotal role as a principal supplier of HBM3 memory chips to significant clientele, including Nvidia, has concurrently revised Samsung's target price from 110,000 Korean won to 120,000 Korean won.

This noteworthy development has spurred a notable 6% increase in Samsung's stock price, marking the most substantial single-day surge since January 2021. Nevertheless, Samsung has, as of yet, refrained from confirming the precise details of its supply arrangements with customers, including Nvidia.

Until this juncture, SK Hynix had exclusively served as Nvidia's primary supplier. Consequently, with Samsung's forthcoming technical validation for the supply of HBM3 chips to Nvidia, there is a prospective transition wherein Samsung may undertake the processing of individual GPU chips and HBM3 integration into advanced packages, such as the H100. Previously, there have been indications of a collaborative effort between Samsung and Nvidia concerning HBM3 technical validation and advanced packaging services.

It is noteworthy that Samsung has expressed its willingness to engage in the design of intermediary wafer technologies for Nvidia. On the engineering front, Samsung is amenable to receiving Nvidia's AI GPU wafers procured from TSMC, subsequently sourcing HBM3 from Samsung's memory chip division, culminating in the utilization of Samsung's I-Cube 2.5D packaging technology to finalize this product.

Samsung holds a unique distinction as the sole entity capable of furnishing both advanced packaging solutions and HBM products concurrently. Initially, AMD had contemplated availing TSMC's CoWoS advanced packaging services. However, due to capacity constraints and significant allocation by Nvidia, AMD was compelled to alter its strategy, opting instead for advanced packaging services facilitated by Samsung.

The impending introduction of Samsung's HBM3 and HBM3P offerings is poised to augment the profitability of the company's semiconductor division, commencing in the ensuing year. Insights derived from Jiuzhang Consultancy's data reveal that in the 2022 HBM product market landscape, SK Hynix commanded a 50% market share, with Samsung securing 40%, and Micron comprising 10%. It is notable, however, that HBM's share within the broader DRAM market remains at a modest 1%. Projections from this consultancy underscore the potential for HBM to sustain a robust annual growth rate of 45% from the present year through 2025.

Furthermore, astute industry analysts posit that, in the event of Samsung's successful integration into Nvidia's semiconductor supply chain, Samsung could conceivably provide as much as 30% of Nvidia's HBM3 requirements by the year 2024.