Can Tesla, Apple revive Samsung’s struggling chip units?

Samsung Electronics' building in Seocho District, southern Seoul, is pictured on July 31. [YONHAP]

 
Samsung Electronics' foundry division, long mired in losses, has secured a 23 trillion won ($16.6 billion) AI chip supply contract with Tesla. Apple’s decision to use Samsung’s sensors has also given the system LSI unit, which will handle the design, a chance to recover.
 
Now, market attention is turning to the memory business, the pride and “eldest brother” of the DS division.
 

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The outlook is challenging. Samsung Electronics' share of the high bandwidth memory (HBM) market stood at 17 percent in the second quarter, according to Counterpoint Research, down from 41 percent from a year earlier.
 
This drop also cost Samsung Electronics its position as the world’s top memory seller, which went to SK hynix. Seeking to reclaim the memory crown, Samsung has decided to “keep its head down and strike back with its unique weapon.”
 
For fifth-generation HBM (HBM3E) — the product that has defined the rivalry between Samsung and SK hynix — Samsung is aiming for a turnaround through aggressive pricing. In its second-quarter 2025 earnings conference call, Samsung announced plans to expand HBM3E supply while signaling a price drop.
 
“We aim to normalize our HBM business and plan to significantly increase HBM3E sales in the second half compared to the first,” said Kim Jae-june, vice president of the memory business unit. “But with supply growth outpacing demand, market prices are expected to be affected in the short term.”
 

A flag bearing the logo of Samsung Electronics flutters at the company's office building in Seoul on April 15. [REUTERS/YONHAP]

 
Samsung Electronics currently supplies HBM3E to AMD and Broadcom but has yet to break into the supply chain of Nvidia. In contrast, SK hynix began supplying HBM3E to Nvidia in March 2024 and remains its largest supplier, setting new earnings records.
 
Samsung Electronics plans to focus on securing market share, even at the expense of profit. “Considering the long-term growth potential of AI-related HBM demand and the importance of this market, we will continue to focus on securing HBM3E demand,” Kim said.
 
The company also plans to target Nvidia’s supply chain with competitive pricing. As the third supplier, Samsung Electronics has less bargaining power and may opt for an aggressive pricing strategy to disrupt existing supply arrangements, even if it means decreased margins.
 
“It is already a given that a competitor will enter the market,” said Han Dong-hee, an analyst at SK Securities. “It will be mathematically difficult for SK hynix to further increase its market share.”
 

The logo of SK Hynix is pictured during the 26th Semiconductor Exhibition in Seoul on Oct. 23, 2024. [REUTERS/YONHAP]

 
For next-generation HBM, where no company has yet established dominance, differentiation will be key. At the Flash Memory Summit 2025, the world’s largest memory exhibition, on Tuesday, Samsung Electronics declared its ambition to make the custom HBM market a stage for its future growth.
 
Samsung Electronics showcased HBM4 utilizing its sixth-generation 10-nanometer node, one generation ahead of rivals. While SK hynix was the first to supply HBM4 samples to Nvidia, Samsung Electronics is banking on superior performance. Nvidia has yet to announce benchmark results from either company.
 
“Market expectations are growing that Samsung Electronics’ HBM4 will be installed in Nvidia products next year,” said Park Yu-ak, an analyst at Kiwoom Securities.
 
Samsung also plans to leverage an advantage SK hynix lacks — an “integrated solution.” Unlike HBM3E, HBM4 involves certain processes using ultrafine fabrication technology, requiring memory makers to work with foundries. SK hynix currently relies on Taiwan’s TSMC for these processes.
 

Samsung Electronics' office in Seocho District, southern Seoul, is pictured on July 17. [NEWS1]

 
“At present, Samsung Electronics is the only company in the world producing both memory and foundry products,” said Han Jin-man, president of the foundry business unit, earlier this year. “We have yet to fully demonstrate this potential in the market, but we plan to ramp up cooperation between the memory and foundry businesses.”
 
Some analysts say the foundry unit’s Tesla order could create opportunities for the memory business. AI chips often underperform due to memory bottlenecks during inference, making close integration between chip design and memory increasingly important.
 
Tesla’s AI6 chips, to be produced by Samsung Electronics, will be used across autonomous vehicles, robots and supercomputers requiring high-performance memory. If Samsung Electronics can expand its Tesla supply in addition to breaking into Nvidia’s supply chain, the memory unit’s earnings recovery could come sooner.


Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY LEE GA-RAM [kim.minyoung5@joongang.co.kr]