After losing $162 billion last year, Samsung’s 2025 depends on Nvidia

Samsung shares rose when the company reported preliminary fourth-quarter profit that was significantly below market expectations. Investors put aside the data and focused instead on comments from Nvidia CEO Jensen Huang, who raised hopes for Samsung’s revival in 2025. $162 billion: Viewpoint The tech giant has so far missed out on the artificial intelligence boom that has boosted other tech companies across the board. Despite the disappointing earnings, Samsung shares rose after Huang’s comments, underscoring that Samsung’s success this year may hinge on Nvidia, whose CEO has repeatedly demonstrated the power of his words to move markets. Samsung declined to comment when contacted by CNBC. Challenges Samsung faces Samsung was once a dominant player in memory, a type of semiconductor used to store data in devices such as laptops and smartphones. While the South Korean giant is known as a major player in consumer electronics, which does form a significant part of its business, the majority of its profits come from the sale of semiconductors, especially memory. However, memory prices have been depressed due to sluggish demand, which has put pressure on Samsung’s profitability. The company said operating profit for the quarter ended Dec. 31 was about 6.5 trillion won ($4.47 billion), below LSEG’s forecast of 7.7 trillion won. Why Nvidia is important to Samsung Nvidia chips and systems go into data centers and are used to train large artificial intelligence models, such as those developed by OpenAI. Some of Nvidia’s systems require a component called high-bandwidth memory (HBM). Next-generation memory involves stacking multiple dynamic random access memory (or DRAM) dies. With Samsung’s leadership in traditional memory, many had thought the company would become a major supplier to Nvidia and play an important role in the artificial intelligence boom. So far, this has not been achieved. Samsung lags behind long-time rival SK Hynix in HBM, which analysts previously told CNBC was due to Samsung’s lack of investment in the technology. SK Hynix is Nvidia’s top supplier of HBM, and Nvidia has not yet certified Samsung’s HBM for use in its latest products. However, Nvidia’s Huang told reporters last week that he was confident Samsung could redesign its HBM to meet the company’s requirements. According to media reports, Huang Renxun said at a press conference: “I am confident that Samsung will succeed with HBM memory. I am confident as if tomorrow is Wednesday.” Huang Renxun’s support for Samsung has pushed the stock price higher; so far in January, The increase is about 1.7%. MS Hwang, research director at Counterpoint Research, told CNBC via email: “Samsung’s success in 2025 depends on NVIDIA’s qualifications.” Is Samsung close to a redesign? Chip companies are focused on improving semiconductor performance while reducing power consumption. Huang did not go into detail about the specific parts of Samsung’s HBM that need to be redesigned, but Counterpoint’s Huang said Samsung is shifting its focus from “die size or cost to controlling power consumption or heat.” “It will take several years to change the process platform, but the inflection point is expected to be in 2025,” Hwang added. While Jen-Hsun Huang said he expected Samsung to qualify Nvidia relatively quickly, Kazunori Ito, director of equity research at Morningstar Inc., noted that the Nvidia CEO’s comments did not give any timeline for redesign and certification. Instead, Ito said, this could be a ploy by Huang to gain influence over Nvidia’s other HBM suppliers. “NVIDIA CEO Jensen Huang mentioned at CES that it won’t take long for Samsung to redesign HBM and obtain certification, but I believe this just shows that NVIDIA intends to add Samsung to the HBM supplier list to obtain more supplies and suppliers than Pricing power,” Ito told CNBC via email. “His comments haven’t changed much over the past few months, so it’s difficult for us to assess the timeline.”

Nvidia Corp. co-founder and CEO Jen-Hsun Huang during a press conference in Taipei, Taiwan, Tuesday, June 4, 2024. The last necessary step before starting to provide the components necessary to train an AI platform.

Annabelle Chronicle | Bloomberg | Getty Images

Samsung’s shares rose when it reported preliminary fourth-quarter profit that fell well short of market expectations.

Investors put aside data and focus instead on comments from people. NVIDIA Chief Executive Jensen Huang has raised hopes for a revival in 2025.

Previously, Samsung lost nearly $162 billion in market value in 2024 due to one major factor: the belief that the technology giant has so far missed out on the artificial intelligence boom that has comprehensively boosted other technology companies.

Samsung shares rise after Huang’s comments – though Disappointing earnings — highlighted how this year’s success hinges on Nvidia, whose CEO has repeatedly demonstrated the power of his words to move markets.

Samsung declined to comment when contacted by CNBC.

Challenges facing Samsung

Samsung was once a dominant player in memory, a type of semiconductor used to store data in devices such as laptops and smartphones.

While the South Korean giant is known as a major player in consumer electronics, which does form a significant part of its business, the majority of its profits come from the sale of semiconductors, especially memory.

However, memory prices have been depressed due to sluggish demand, which has put pressure on Samsung’s profitability. The company said operating profit for the quarter ended Dec. 31 was about 6.5 trillion won ($4.47 billion), below LSEG’s forecast of 7.7 trillion won.

Why Nvidia is important to Samsung

Nvidia chips and systems go into data centers and are used to train large artificial intelligence models, such as those developed by OpenAI.

Some of Nvidia’s systems require a component called high-bandwidth memory (HBM). Next-generation memory involves stacking multiple dynamic random access memory (or DRAM) dies.

With Samsung’s leadership in traditional memory, many had thought the company would become a major supplier to Nvidia and play an important role in the artificial intelligence boom.

So far, this has not been achieved.

Samsung lags behind long-time rival SK Hynix in HBM, Analysts previously told CNBC that this was due to Samsung’s lack of investment in the technology.

SK Hynix is Nvidia’s top supplier of HBM, and Nvidia has not yet certified Samsung’s HBM for use in its latest products.

However, Nvidia’s Huang told reporters last week that he was confident Samsung could redesign its HBM to meet the company’s requirements.

“I’m confident that Samsung will be successful with HBM memory,” Huang reportedly said. “I’m confident like tomorrow is Wednesday.” media organization during his press conference.

Huang’s support for Samsung has pushed shares higher; so far in January, they’re up about 1.7%.

“Samsung’s success in 2025 depends on NVIDIA’s qualifications,” MS Hwang, research director at Counterpoint Research, told CNBC via email.

Is Samsung getting closer to a redesign?

Chip companies are focused on improving semiconductor performance while reducing power consumption.

Huang did not go into detail about the specific parts of Samsung’s HBM that need to be redesigned, but Counterpoint’s Huang said Samsung is shifting its focus from “die size or cost to controlling power consumption or heat.”

“It will take several years to change the process platform, but the inflection point is expected to be in 2025,” Hwang added.

Samsung Electronics co-CEO wants to build an 'artificial intelligence-driven company'

While Jen-Hsun Huang said he expected Samsung to qualify Nvidia relatively quickly, Kazunori Ito, director of equity research at Morningstar Inc., noted that the Nvidia CEO’s comments did not give any timeline for redesign and certification.

Instead, Ito said, this could be a ploy by Huang to gain influence over Nvidia’s other HBM suppliers.

“NVIDIA CEO Jensen Huang mentioned at CES that Samsung will redesign HBM and obtain certification, but I believe this only shows that NVIDIA intends to add Samsung to the HBM supplier list to gain more supply and pricing power than the supplier. ,” Ito told CNBC via email.

“His comments haven’t changed much over the past few months, so it’s difficult for us to assess the timeline.”