The AI Chip Race: Samsung vs. SK Hynix
The AI revolution is powering the growth of tech giants like Nvidia, casting a spotlight on a critical component of AI systems: memory chips. Leading this space are two South Korean powerhouses – Samsung and SK Hynix. In the race to dominate the AI chip market, which company has the stronger hand?
Dominating the Memory Landscape
Memory chips play a pivotal role in AI, particularly in graphics processing units (GPUs). Samsung, a titan in the industry, holds the crown as the world’s largest manufacturer of dynamic random-access memory (DRAM). However, SK Hynix is making waves, recently becoming the first to mass produce HBM3E, a next-generation memory chip crucial for AI chipsets.
SK Hynix has been Nvidia’s primary supplier of HBM3 chips for its AI chipsets. Both companies recently reported impressive earnings, with Samsung seeing a 900% surge in operating profit and SK Hynix breaking its streak of net losses.
The SK Hynix Advantage
Industry experts believe SK Hynix has the edge in this AI chip race. Trent Masters of Alphinity Investment Management cites the company’s leadership in HBM3, its partnership with TSMC on HBM4 development, and its pure focus on memory as reasons for his preference.
Nam Hyung Kim of Arete Research shares this view, emphasizing SK Hynix’s dominance in HBM and its higher profit margins in the sector. He notes that Samsung’s broader portfolio, including low-value consumer electronics, could spread its focus.
Samsung’s Comeback Strategy
While SK Hynix may currently lead, Sung Kyu Kim of Daiwa Capital Markets believes Samsung is well-positioned to make a comeback. He anticipates Samsung catching up in the near term and benefiting from a surge in stock price.
However, Kim also suggests that SK Hynix may present a potential buying opportunity once its stock adjusts to the intensifying competition in HBM3E.
Key Takeaways
- Samsung and SK Hynix are dominant players in the memory chip market, a crucial component of AI systems.
- SK Hynix has early leadership in HBM3 and HBM3E, giving it an advantage in the AI chip race.
- Experts prefer SK Hynix for its pure memory focus and higher profit margins.
- Samsung is expected to catch up in the near term and has potential for upside growth.
- The timing of investment in Samsung or SK Hynix depends on the market’s trajectory and the intensity of competition in HBM3E.
Data sourced from: cnbc.com
