Samsung to Adopt Chip Making Technology Utilized by Competitors

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Samsung Electronics is planning to adopt a chip making technology promoted by its rival SK Hynix in a bid to catch up in the competition to produce high-end chips essential for powering artificial intelligence, according to five sources familiar with the matter.

The demand for high bandwidth memory (HBM) chips has surged alongside the increasing popularity of generative AI. However, Samsung, unlike competitors SK Hynix and Micron Technology, has not engaged in any deals with AI chip leader Nvidia to supply the latest HBM chips.

One of the factors contributing to Samsung's lag behind its rivals is its adherence to chip making technology known as non-conductive film (NCF), which has encountered production challenges. In contrast, Hynix has transitioned to the mass reflow molded underfill (MR-MUF) method to address the weaknesses of NCF, as noted by analysts and industry observers.

Recently, Samsung has placed orders for chipmaking equipment capable of handling the MUF technique, according to three sources directly involved.

"Samsung needed to improve its HBM production yields... adopting the MUF technique represents a concession for Samsung, as it follows the approach initially adopted by SK Hynix," one source commented. While Samsung's HBM3 chip production yields currently range from 10-20%, SK Hynix has achieved yield rates of approximately 60-70% for its HBM3 production, as stated by several analysts.

The latest versions of HBM chips, HBM3 and HBM3E, are in high demand, particularly for their integration with core microprocessor chips to handle large volumes of data in generative AI applications. Samsung is also in discussions with material manufacturers, including Japan's Nagase, to procure MUF materials. However, mass production of high-end chips using MUF is unlikely to commence until next year at the earliest, as Samsung needs to conduct further testing.