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There’s a bit of economic news that fell off the map somewhere along the way. It had to do with Samsung Electronics becoming the first company in the world to develop and mass-produce semiconductors at the scale of just a few nanometers.

Part of that has to do with integration technology reaching its limits, to the point where Moore’s Law — the idea that semiconductor performance doubles every two years — no longer applies. But another factor is the change in the very landscape of the semiconductor industry amid the artificial intelligence race that accelerated with the advent of ChatGPT.

The key processor functions were assumed by graphics processing units (GPUs) rather than central processing units (CPUs), and there was an explosive rise in demand for high-bandwidth memory (HBM), which involves multiple layers of DRAM, or dynamic random-access memory. This explains the sharp rise in share prices for the US company Nvidia and Korea’s SK Hynix, which are at the top of their respective fields in GPUs and HBM.

Samsung Electronics may be the big heavyweight in memory semiconductors, but its reasons for falling behind in the HBM race are well known. In the past, it had been neck-and-neck with SK Hynix, which was the first in the world to develop HBM (in December 2013), even as Samsung was the first to succeed in mass production of second-generation HBM2.

But in 2019, Samsung scaled down its HBM development team. This was based on the miscalculation that the area did not hold major growth potential due to the poor performance relative to cost.

It ended up building the team back up again in 2021, but in the two years since then, it has been desperately trying to make up for lost time. Recently, the foreign press has been reporting on the failure of Samsung’s 5G HBM3E to pass Nvidia’s testing. SK Hynix is already monopolizing supplies of that memory to Nvidia.

Samsung’s humiliations do not stop there.

As a fabless semiconductor company, Nvidia relies on the Taiwanese company TSMC for production. In contrast with DRAM in the CPU era, AI semiconductors require simultaneous packaging of GPUs and HBM. In effect, TSMC is the company doing the performance testing on Samsung’s HBM.

This is why analysts are predicting TSMC will be even tougher on Samsung, which is a competitor in the foundry (non-memory) field.

Further hamstringing Samsung Electronics is its unfortunate relationship with Hanmi Semiconductor, a semiconductor equipment company that may be described as Korea’s version of ASML. Hanmi produces dual TC bonders, a key piece of equipment in HBM manufacturing — but it only supplies them to Hynix and US-based Micron Technology. Hanmi has cut off ties with Samsung ever since emerging victorious in a legal case over Samsung stealing technology from the packaging equipment it had provided.

Samsung’s measures have been old-school, including six-day workweeks for executives and the return of “old boys” to its control tower. It’s another crisis unfolding for Samsung Electronics Chairperson Lee Jae-yong.

By Lee Jae-sung, editorial writer

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