Samsung needs to change to keep up with AI development: Expert

Seoul: Samsung Electronics, the world’s largest memory chipmaker, appears to have fallen into a “crisis” amid challenging market conditions and disappointing quarterly performances.

Particularly due to its recent loss of leadership in the high bandwidth memory (HBM) segment, concerns have intensified over the company’s potential decline in the semiconductor industry, where it has held the No. 1 position in the memory chip market since the early 1990s.

Lin Hong-wen, a senior journalist at Taiwan’s Business Today and an expert on the chip industry, pointed to several long- and mid-term challenges on global and regional levels that he said weighed heavily on Samsung Electronics.

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“‘The rise of China’ dealt a direct blow to Samsung,” Lin said in an interview with Yonhap News Agency ahead of the inaugural Yonhap News Future Economic Forum, set to be held next Thursday in Seoul.

“China is competing with Samsung in multiple sectors, including mobile phones, panels and memory chips,” he said. “China is replacing imported goods with its own products, and Samsung was most affected by this policy.”

Lin, who is also the author of “Chip Island: How TSMC and Taiwan Triumph,” highlighted the faster-than-expected development of artificial intelligence (AI) technology as another key factor, along with geopolitical risks, such as the ongoing trade dispute between Washington and Beijing, and Japan’s export controls on critical industrial materials to South Korea.

“The rapid growth of AI has reshaped the competitive landscape of the chip industry,” explained Lin, adding that Samsung Electronics has failed to secure dominant technologies in HBM, a key memory chip for AI accelerators, in a timely manner due to those challenges.

“Samsung was excluded from the TSMC-Nvidia-SK hynix trilateral alliance, and eventually fell behind SK hynix in HBM technology and mass production.”

SK hynix Inc., the distinct leader in the booming HBM market, supplies its advanced HBM chips to Nvidia Corp., whose AI accelerator is essential for AI computing, while TSMC manufactures Nvidia’s products.

Samsung Electronics has struggled to pass Nvidia’s quality tests with its fifth-generation HBM3E chips, while SK hynix already began supplying up-to-date eight-layer HBM3E to Nvidia in March. SK hynix is set to start shipping the 12-layer HBM3E later this year.

As a result, SK hynix is expected to surpass Samsung Electronics’ semiconductor division in terms of annual operating profit this year for the first time ever in history.

Lin emphasised that it is time for Samsung to reconsider its business models and decision-making processes.

However, due to the company’s extensive product portfolio — ranging from semiconductors, hard drives and LED screens to TVs, mobile phones and laptops — it may be too large to respond swiftly to significant industry shifts, he noted.

“(Due to its wide-ranging product spectrum) Samsung faces more challenges whenever there is a seismic shift in the industry,” he said. “In particular, today’s industrial competition environment is shifting toward a collaborative approach, and ‘alliances’ have become a trend. Samsung must change.”

Despite the current difficulties, Lin expressed confidence in Samsung’s potential for recovery, citing the company’s history of “turning a misfortune into a blessing.”

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