Samsung Electronics shares rose on Wednesday after Nvidia Corp . (NASDAQ:NVDA) announced it is in the process of certifying Samsung's high-bandwidth memory chips (HBM), a crucial step that could enable the Korean company to benefit from the surging demand for AI technologies.
The stock was up 2.8% at 77,400 won ($56.35) at the time of writing.
As the world's leading memory-chip manufacturer, Samsung had seen its shares drop nearly 6% in April and over 5% in May amid concerns that it was lagging in the development of crucial HBM components for AI processors.
These concerns were amplified by recent reports indicating that Samsung's HBM product samples had failed Nvidia's (NVDA) tests due to issues with heat and power consumption.
However, Nvidia's CEO Jensen Huang clarified that Samsung's HBM products had not failed any qualification tests but required additional refinements, alleviating investor worries.
“We just have to do the engineering. It's just not done," Huang told reporters during the Computex event Tuesday.
Huang said that his company is evaluating the HBM chips provided by Samsung and Micron Technology (NASDAQ:MU). Nvidia's approval is essential for these companies to compete directly with SK Hynix whose stock has surged notably since it started supplying Nvidia with HBM3 and the more advanced HBM3e chips.
“Despite initial setbacks in gaining Nvidia’s approval for its [eight-layer] HBM3e, we are quite optimistic about approval in the next two to three months,” said analysts at CLSA Securities Korea.
Samsung, the world's largest memory chip producer, has started mass production of its latest eight-layer HBM3E and plans to produce 12-layer versions in Q2. The company expects its HBM supply to triple in 2024 compared to last year.