The dynamic of changes in the value of shares of Samsung Electronics Co. currently demonstrates a movement in the direction of giving way to similar indicators of a smaller competitor of this company in the sphere of memory chip production SK Hynix, which is currently actively developing against the background of the bet of many investors that it will be able to become one of the leaders of the so-called artificial intelligence race.
SK Hynix securities have grown by 67% since the beginning of this year. The positive dynamic is mainly because this company has concluded a deal with Nvidia for the supply of premium microcircuits of memory with high bandwidth. Samsung shares have also risen in price since the beginning of 2023, but in this case, the growth was 24%.
According to experts, the gap in business growth rates between these competitors is likely to increase.
The hype around machine intelligence is observed against the background of a low level of global demand for traditional memory products. This problem is of particular relevance in the smartphone market, where the current situation is developing in the direction of the worst recession in the last ten years. This circumstance negatively affects Samsung’s financial condition. The smartphone market for the mentioned company is one of the main sources of income.
The high level of demand for chips is due to the active development of artificial intelligence technologies and services based on it, including, for example, ChatGPT. The Philadelphia Semiconductor index has shown growth of 31% this year.
Samsung has an additional opportunity to extract benefits from the hype around chips. The company provides services for the contract production of microcircuits. However, the brand will most likely fail to become the leader of the chip-making industry since Taiwan Semiconductor Manufacturing Co. confidently dominates the foundry business.
After many years of leadership in the so-called sphere memory, Samsung now sees the need for HBM, a technology optimized to work with artificial intelligence accelerators. HBM is equipped with a DRAM stack, which is placed on top of the processor, and provides faster data transfer. SK Hynix also demonstrates a higher level of competitiveness in this direction. The company was able to win Nvidia as a customer for its HBM3. Samsung failed to sign a contract with the American AI giant. SK Hynix does not plan to stop there, promising to release HBM4 by 2025.
As we have reported earlier, Samsung Reports Slowing Fall in Profits.