Samsung is ready to fix its past errors and dominate the next-gen AI memory chip Business

Samsung is known around the world as the top manufacturer of memory chips, but the company recently missed a major opportunity. When the huge demand for Artificial Intelligence (AI) products started rising in 2022, Samsung wasn’t quick enough to offer the special, high-speed memory chips needed for AI, called High-Bandwidth Memory (HBM). This delay allowed their rivals, SK Hynix and Micron, to jump ahead and control most of this very profitable new market.

The company ran into clear problems with its previous generation of HBM3E chips. The main issue was that these chips were overheating, which caused them to fail the strict quality checks required by major customers like Nvidia.

By the time Samsung fixed the heat problem and got approval from Nvidia, SK Hynix had already captured the majority of the market. To sell their chips and compete, Samsung had no choice but to drop their prices by about 30% compared to what their competitors were charging.

Now, Samsung is taking serious steps to prevent that failure from happening again. They have invested heavily in creating their upcoming HBM4 chips. To gain an advantage, Samsung decided to use a better way of making them, called 1c DRAM.

This is a more advanced production method compared to the 1-bit DRAM technique used by their rivals. Because of this superior technology, Samsung expects its HBM4 chips to be faster and use less power than any of the competing products.

This new generation of HBM4 chips is going to be incredibly valuable. An advanced 12-layer HBM4 chip is expected to sell for around $500, marking a massive price jump from the previous models. Samsung is currently finalizing talks with Nvidia to supply these chips.

Since Nvidia’s demand for HBM4 is far greater than what all current suppliers can produce, they absolutely need Samsung’s supply, even at a high price. Samsung is aiming to match the high prices set by SK Hynix.

To prepare for this massive demand, Samsung is planning a huge expansion of its manufacturing capacity. They are looking to increase their production of the key 1c DRAM chips from 20,000 units per month to an ambitious 150,000 units per month by next year.

However, they must overcome a big challenge: their “yield,” which is the rate of successfully produced chips that meet quality standards. Currently, Samsung’s HBM4 yield is only 50%, a rate that is not high enough. Improving this production efficiency is even more critical than chip speed, and Samsung needs to quickly fix this before mass production begins.

Nvidia is expected to complete its quality assessment of Samsung’s HBM4 chips very soon. If those tests are successful, Samsung will send out final production samples early next year. If everything goes according to their plan, they can start mass production and begin shipping the HBM4 chips in the middle of 2026.

Because Samsung has both better technology and the financial power to invest in production, experts believe it will quickly gain a market share similar to SK Hynix, securing billions of dollars in revenue over the coming years.