The introduction of ChatGPT has lit a hearth beneath the shares of corporations that produce microchips, the brains of synthetic intelligence. Bets on the potential of so-called generative A.I. have poured in. The most eye-catching instance of the rally is Silicon Valley’s Nvidia, the highest vendor of chips utilized in synthetic intelligence, whose shares are up almost 200 % this 12 months.
Samsung Electronics, the South Korean large, is hoping to get in on the motion. Widely recognized for its client merchandise, Samsung additionally has the world’s largest reminiscence chip business and the second-busiest semiconductor foundries, which construct customized microchips for different corporations.
Foreign buyers have purchased $8 billion value of Samsung shares this 12 months on the South Korean inventory market — already the most important quantity of international purchases in Samsung for any 12 months since 2000, in keeping with information supplied by CLSA, an funding agency in Hong Kong. The surge reversed a sell-off over the earlier three years, when international buyers bought extra of the corporate’s inventory than they purchased.
At an occasion in California final week, Samsung detailed what it known as its “vision in the A.I. era.” Samsung believes it may snatch market share from the main chip producer, Taiwan Semiconductor Manufacturing Company, however just lately the development has gone the opposite means. According to Counterpoint Research, a market analysis agency, TSMC enjoys roughly 60 % of complete revenues within the world foundry business and Samsung solely 13 % — a spot that has widened since 2021 as a few of Samsung’s prospects, together with Nvidia, have shifted their business to TSMC.
Samsung mentioned it spent $7.4 billion within the first quarter of this 12 months — when its income fell a staggering 95 % — on its chip business, a portion of which is predicted to serve the A.I. business. It is increasing manufacturing at its chip-manufacturing complicated in Pyeongtaek, about 40 miles south of Seoul, in addition to a chip manufacturing unit in Texas. Over the subsequent 20 years, Samsung mentioned, it plans to work with the federal government on a $230 billion plan to construct a chip-making “megacluster” in South Korea.
The optimism is tied to Samsung’s reminiscence chip business, which makes up roughly half the corporate’s working revenue in a median 12 months, mentioned Sanjeev Rana, a senior analyst at CLSA.
Compared with conventional servers — the {hardware} that underpins desktops and databases — the servers constructed for synthetic intelligence can require 4 occasions the reminiscence, known as DRAM. Samsung instructions roughly 45 % of the worldwide DRAM market. And it’s the solely main reminiscence firm to put money into extra manufacturing regardless of an industrywide tumble in reminiscence costs, Mr. Rana added.
The chip business is understood for its boom-and-bust cycles. After a spike in demand for reminiscence chips in the course of the pandemic, chip makers started one among their worst downturns in years final fall. Samsung’s reminiscence chip rivals, together with Micron Technology within the United States and South Korea’s SK Hynix, mentioned they might reduce on investments in manufacturing this 12 months.
Some analysts suppose Samsung’s spending within the down cycle will repay in the long term when the reminiscence sector recovers, partly due to synthetic intelligence.
“If demand comes back, they will be very ready,” Mr. Rana mentioned.
But skeptics query whether or not Samsung can obtain the form of indispensable position in generative A.I. that it has had in smartphones and high-resolution televisions. It misplaced out final 12 months when Nvidia selected SK Hynix as its provider for a high-powered reminiscence chip anticipated to turn into a fast-growing business line due to its prominence in future A.I. servers.
SK Hynix controls roughly 50 % of that marketplace for high-bandwidth reminiscence, or HBM, in contrast with Samsung’s 40 %, in keeping with TrendForce, a market analysis agency. Shares of SK Hynix are up greater than 50 % this 12 months, surpassing Samsung’s achieve of 30 %.
Samsung mentioned it had already begun supplying “key customers” with a competing model of HBM. The subsequent era of its HBM is about to launch this 12 months, it added.
Samsung’s lag in HBM expertise may very well be a symptom of broader points, mentioned Nam Hyung Kim, an analyst at Arete Research, an fairness analysis agency. In a report in February, Mr. Kim wrote that Micron had additionally leapfrogged Samsung’s expertise in DRAM and one other kind of reminiscence, NAND flash.
“The problem with Samsung is they always want to be big,” Mr. Kim mentioned. “They’re spending so much money, but they’re not the leader in technology anymore.”
Mr. Kim mentioned Samsung ought to make investments extra in analysis and never fear a lot about market share. “Samsung is a bigger player than Apple in smartphones,” he mentioned. “But how many people think Samsung makes a better smartphone than Apple?”
Samsung mentioned in a press release that it had been profitable in a number of facets of superior semiconductor applied sciences and that it may provide prospects “comprehensive solutions” within the evolving panorama of A.I. and different applied sciences.
Samsung’s personal executives have supplied a extra sober prognosis.
In May, the president of Samsung’s semiconductor division, Kyung Kye-hyun, acknowledged in a chat to college college students that the corporate “lagged behind” TSMC by as much as two years. The remarks, which circulated broadly in Korean media, have been a uncommon admission for a corporation that has lengthy prided itself on its tech management.
Mr. Kyung went on to vow that Samsung’s reminiscence chips would turn into a “core” of A.I. supercomputers by 2028. “We can outperform TSMC within five years,” he mentioned.
Jin Yu Young contributed reporting.
Source: www.nytimes.com