After last year’s $162-billion stock wipeout, Samsung’s 2025 hinges on Nvidia
When Samsung reported fourth-quarter preliminary profit that missed market forecasts in a big way, its stock rose. Investors put aside the numbers and instead focused on comments from Nvidia CEO Jensen Huang, giving hope of a revival for Samsung in 2025. It comes after a near-$162-billion market cap wipeout for Samsung in 2024 driven by one major factor: the view that the tech giant had so far missed out on the AI boom which has boosted other tech companies across the board. Samsung’s share price rise following Huang’s comments — despite disappointing earnings — underscores how its success this year could hinge on Nvidia, whose CEO has proved on a number of occasions that his words have the power to move markets. Samsung declined to comment when contacted by CNBC. Samsung’s challenges Samsung was once the dominant player in memory, a type of semiconductor used to store data that can be found in devices like laptops and smartphones. While the South Korean titan is known as a major player in consumer electronics, which does form a big part of its business, the bulk of its profit comes from semiconductors, and in particular the sale of memory. However, memory prices have been depressed amid sluggish demand which has weighed on Samsung’s profitability. The company said operating profit for the quarter ended Dec. 31 would be around 6.5 trillion won ($4.47 billion), missing LSEG estimates of 7.7 trillion won. Why Nvidia matters for Samsung Nvidia chips and systems go into data centers where they are used to train huge artificial intelligence models such as those developed by OpenAI. Part of Nvidia’s systems require a component known as high-bandwidth memory, or HBM. This next generation of memory involves stacking multiple dynamic random access memory (or DRAM) chips. With Samsung’s leading position in traditional memory, many had thought the company would be a key supplier to Nvidia and play a major role in the AI boom. That — so far — has not come to pass. Samsung has fallen behind long-time rival SK Hynix in HBM, with analysts previously telling CNBC that this was due to Samsung’s underinvestment in the technology. SK Hynix is Nvidia’s top supplier of HBM and Nvidia has not certified Samsung’s HBM to be used in its latest products. However, Nvidia’s Huang told reporters last week that he was sure Samsung could redesign its HBM to meet the company’s requirements. “I have confidence that Samsung will succeed with HBM memory. I have confidence like tomorrow is Wednesday,” Huang reportedly said, according to media outlets at his press briefing. Huang’s backing of Samsung sent shares higher; so far in January, they’re around 1.7% higher. “Samsung’s success in 2025 hinges on NVIDIA qualification,” MS Hwang, research director at Counterpoint Research, told CNBC by email. Samsung redesign close? Chip firms are focusing on increasing the performance of their semiconductors while reducing power consumption. Huang’s did not expand on the exact parts of Samsung’s HBM that need a redesign but Counterpoint’s Hwang said Samsung was shifting its focus from “chip size or cost to control power consumption or heat.” “Changing process platform takes years, but the inflection point is expected to be in 2025,” Hwang added. While Huang said he expects Samsung to succeed in its Nvidia qualification — and relatively quickly — Kazunori Ito, director of equity research at Morningstar, noted that the Nvidia CEO’s comments didn’t give any indication of a timeline for the redesign and certification. Instead, it may be a ploy from Huang to gain leverage over Nvidia’s other HBM suppliers, Ito said. “NVIDIA CEO Jensen Huang mentioned at CES that it will not take long for Samsung to redesign HBM and [be] certified, but I believe this only shows NVIDIA’s intention to add Samsung to the HBM supplier list to get more supply and pricing power over suppliers,” Ito told CNBC via email. “His comments have not changed much over the past few months, so it is hard for us to assess the timeline.”
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