Samsung to use chip-making tech favoured by SK Hynix as AI race heats up, sources say

The demand for high bandwidth memory (HBM) chips has boomed with the growing popularity of generative AI. But Samsung, unlike peers SK Hynix and Micron Technology, has been conspicuous by its absence in any deal making with AI chip leader Nvidia to supply latest HBM chips.

One of the reasons Samsung has fallen behind is its decision to stick with chip making technology called non-conductive film (NCF) that causes some production issues, while Hynix switched to the mass reflow moulded underfill (MR-MUF) method to address NCF’s weakness, according to analysts and industry watchers.

Samsung, however, has recently issued purchase orders for chip-making equipment designed to handle MUF technique, three sources with direct knowledge of the matter said.

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“Samsung had to do something to ramp up its HBM (production) yields … adopting MUF technique is a little bit of swallow-your-pride type thing for Samsung, because it ended up following the technique first used by SK Hynix,” one of the sources said.

Samsung’s HBM3 chip production yields stand at about 10-20 per cent while SK Hynix has secured about 60-70 per cent yield rates for its HBM3 production, according to several analysts.

The HBM3 and HBM3E, the newest versions of HBM chips, are in hot demand. They are bundled with core microprocessor chips to help process vast amounts of data in generative AI.

Samsung is also in talks with material manufacturers, including Japan’s Nagase, to source MUF materials, one source said, adding mass production of the high-end chips using MUF is unlikely to be ready until next year at the earliest, as Samsung needs to run more tests.

The three sources also said Samsung plans to use both NCF