Samsung Adopts SK Hynix Chip Technology Amidst Intensifying AI Chip Competition

In a strategic move to beef up its presence in the high-end chip market, Samsung Electronics has decided to adopt a chip-making technology that rivals SK Hynix have favored. This comes amid an escalating race to develop advanced chips capable of powering artificial intelligence (AI).

The demand for high bandwidth memory (HBM) chips is soaring, fueling the AI revolution. Such chips are crucial for handling the enormous data processing required by AI applications. Despite being a significant player in the memory chip industry, Samsung has not actively engaged in partnerships to provide the latest HBM chips for AI leaders like Nvidia, unlike its competitors SK Hynix and Micron Technology.

Samsung had previously committed to a chip manufacturing process known as non-conductive film (NCF). However, this approach has faced production challenges. In contrast, SK Hynix adopted the mass reflow molded underfill (MR-MUF) method, which overcame many of the issues posed by NCF. As pressure intensifies in the AI chip market, Samsung has now placed orders for equipment compatible with the MUF technique, a move that three sources believe is essential to improve their HBM chip production yield.

Currently, Samsung's HBM3 chip yield rates are lagging at 10-20%, while SK Hynix boasts a much healthier 60-70% for their HBM3 chips. The stakes are high, with the latest models, such as the HBM3 and HBM3E, being in great demand for their ability to work alongside core microprocessor chips in AI.

It has been reported that Samsung is also in discussions to acquire MUF materials from companies like Japan's Nagase, but it is anticipated that mass production using this new technique may not commence until the following year. The company acknowledges the value of its internal NCF technology for HBM products but plans to utilize MUF in its upcoming HBM3E chips.

Although facing setbacks in securing a supply deal with Nvidia for its HBM series, Samsung is determined to stay competitive in the AI chip arena. The firm's share price has suffered due to these challenges while SK Hynix and Micron have seen appreciable gains. With the HBM chip market predicted to more than double to nearly $9 billion this year, driven by AI applications, Samsung's strategic shift to embrace MUF is seen as a crucial step to remain a significant player in this high stakes game.

Samsung, chip, AI