In the tumultuous arena of technology, players often jostle for dominance, wielding their innovations like gladiators in a Colosseum. The current heavyweight is artificial intelligence, a terrain where giants are battling it out, from Nvidia’s meteoric rise to Samsung’s assertive leap into the fray. Samsung is not just the South Korean powerhouse known for its world-leading consumer electronics; it also runs the planet’s top memory chip business and the second most active custom microchip foundries. But is this juggernaut ready for the challenges of the A.I. age?
This year, foreign investors flooded Samsung’s shores with an impressive $8 billion, making it the largest foreign influx into the company since the dawn of the millennium. This remarkable tide is quite a shift from the previous three-year ebb, where more Samsung stocks were sold than bought by foreign investors.
Recently, in sunny California, Samsung gave the world a glimpse of its “vision in the A.I. era,” an ambitious journey to seize market share from the leading chip manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC). Yet, the road so far has favored TSMC, boasting about 60 percent of total revenues in the global foundry business, while Samsung lags at 13 percent.
In the first quarter of the year, Samsung, despite a stunning 95 percent fall in profits, invested $7.4 billion into its chip business, a sector poised to serve the A.I. industry. It aims to bolster production at its chip-manufacturing complex in Pyeongtaek, South Korea, and a chip factory in Texas. The company’s 20-year plan even includes partnering with the Korean government for a colossal $230 billion chip-making “megacluster.”
Samsung’s audacious optimism draws from its memory chip business, which typically accounts for about half of the company’s annual operating profit. As Sanjeev Rana, a senior analyst at CLSA, notes, servers designed for artificial intelligence can necessitate up to four times the memory—known as DRAM—of traditional servers. And who’s at the helm of the global DRAM market? Samsung, controlling a staggering 45 percent.
Yet, Samsung’s voyage into the uncharted waters of A.I. is not without skeptics. The crux of their skepticism? Whether Samsung can replicate its smartphone and high-resolution television success in the generative A.I. domain.
One stumbling block was last year’s decision by Nvidia to choose SK Hynix over Samsung for a high-powered memory chip, expected to become a rapidly growing business line due to its role in future A.I. servers. Analyst Nam Hyung Kim from Arete Research suggests that Samsung’s lagging HBM technology might be indicative of wider problems. “They’re spending so much money, but they’re not the leader in technology anymore,” Mr. Kim noted.
Samsung, on the other hand, is confident that they have been successful in several aspects of advanced semiconductor technologies and can offer customers “comprehensive solutions” in the rapidly evolving A.I. landscape. Yet, even within Samsung, there is recognition of the challenge ahead. Kyung Kye-hyun, the president of Samsung’s semiconductor division, admitted in May that the company was trailing TSMC by up to two years.
As we look at the years to come, Samsung’s ambitious plans to make their memory chips the “core” of A.I. supercomputers by 2028 echo in the air. Whether they can outpace TSMC within five years remains to be seen. Yet, it’s clear that Samsung is suiting up and stepping into the arena, ready for the challenging, thrilling game of A.I. dominance. The spectators—us—can only watch in anticipation, ready to bear witness to the unfolding saga. After all, in the tumultuous world of technology, anything can happen.
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