Exclusive: Samsung’s 8-layer HBM3E chips pass Nvidia’s tests for use, sources say

SINGAPORE/SEOUL, Aug 7 (Reuters) - A version of Samsung Electronics’ (005930.KS) fifth-generation high-bandwidth memory chips has passed Nvidia’s (NVDA.O) tests for use in artificial intelligence (AI) processors, three people familiar with the results said.

The qualification clears a major hurdle for the world’s largest memory chipmaker, which has been struggling to catch up with domestic rival SK Hynix (000660.KS) in the race to supply advanced memory chips capable of handling generative artificial intelligence (AI) work.

Samsung and Nvidia have yet to sign a deal to supply the eight-layer HBM3E chips, but will do so soon, the sources said, adding that they expect supplies to begin by the fourth quarter of 2024.

However, the South Korean tech giant’s 12-layer version of HBM3E chips has yet to pass Nvidia’s tests, the sources said, declining to be identified because the matter remains confidential.

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HBM is a type of dynamic random access memory, or DRAM, standard first produced in 2013 in which chips are stacked vertically to save space and reduce power consumption. It is a key component of graphics processing units (GPUs) for artificial intelligence, and helps process the massive amounts of data generated by complex applications.

Samsung has been trying to pass Nvidia’s tests for HBM3E and previous fourth-generation HBM3 models since last year, but has struggled with heat and power consumption issues, Reuters reported in May, citing sources.

The company has since redesigned HBM3E to address those issues, according to people briefed on the matter.

Samsung said after the Reuters article in May that allegations that its chips failed Nvidia’s tests due to heat and power consumption issues were false.

“Samsung is still playing catch-up on HBM,” said Dylan Patel, founder of semiconductor research group SemiAnalysis.

“While they (will) start shipping the 8-layer HBM3E in the fourth quarter, their competitor SK Hynix is ​​racing ahead to ship the 12-layer (HBM3E) at the same time.”

Samsung Elec shares were trading up 4.3% on Wednesday, outpacing a 2.4% gain in the broader market (.KS11), opens a new tab as of 0451 GMT. SK Hynix was up 3.4%. The latest test approval follows Nvidia’s recent certification of Samsung’s HBM3 chips for use in lower-end processors developed for the Chinese market, which Reuters reported last month. Nvidia’s approval of Samsung’s latest HBM chips comes amid surging demand for high-end graphics processing units (GPUs) driven by the generative AI boom that Nvidia and other AI chipmakers are struggling to meet. HBM3E chips are likely to become the dominant HBM product in the market this year, with shipments concentrated in the second half, according to research firm TrendForce. Leading manufacturer SK Hynix estimates that demand for HBM memory chips overall could grow at an annual rate of 82% through 2027. Samsung in July forecast HBM3E chips to account for 60% of its HBM chip sales by the fourth quarter, a target that many analysts say is achievable if the latest HBM chips pass Nvidia’s final approval by the third quarter. Samsung does not provide revenue details for specific chip products. Samsung’s total DRAM revenue was estimated at 22.5 trillion won ($16.4 billion) in the first six months of this year, according to a Reuters poll of 15 analysts, with some saying about 10 percent of that could come from HBM sales.

There are only three major HBM chip makers — SK Hynix, Micron (MU.O) and Samsung.

SK Hynix has been the main supplier of HBM chips to Nvidia and supplied HBM3E chips in late March to a customer it declined to identify. Sources had previously said the shipments went to Nvidia.

Micron also said it would supply Nvidia with HBM3E chips. ($1 = 1,375.6400 won)