Global semiconductor giant Samsung Electronics lost its throne to SK hynix for the first time last year. The fierce competition was largely influenced by the rapid growth of high-bandwidth memory (HBM) demand, driven by the expanding AI market. With attention now focused on how Samsung will overcome this challenge, there is growing expectation that an increase in HBM product share and the emergence of "DeepSeek" could serve as key momentum.

◆ SK hynix surpasses 8 trillion won in operating profit.

According to Samsung Electronics on the 2nd, the revenue of its Device Solutions (DS) division, which oversees the semiconductor business, was 30.1 trillion won in the fourth quarter, with memory sales accounting for 23 trillion won. However, its operating profit was only 2.9 trillion won. The annual operating profit was 15.1 trillion won.

In contrast, rival SK hynix surpassed Samsung Electronics with record-breaking results both in the fourth quarter and for the entire year. SK hynix's fourth-quarter operating profit was 8.08 trillion won, and its annual revenue reached 66 trillion won, with an operating profit of 23.39 trillion won. SK hynix’s annual operating profit was more than 8 trillion won higher than Samsung Electronics'.

The key factor that determined the outcome of the semiconductor business last year was HBM. SK hynix has virtually monopolized the supply of HBM to companies like NVIDIA, and with the expansion of the AI market, demand for HBM surged, leading to strong performance. In the fourth quarter, 40% of its revenue came from HBM. SK hynix is expected to continue this momentum, with HBM shipments already sold out for this year.

On the other hand, Samsung Electronics, which has a lower contribution from HBM, did not achieve the expected results. Additionally, the company struggled with a demand slump in general-purpose memory and faced challenges from low-priced products from China. Despite recording the highest-ever revenue in the fourth quarter, its operating profit slightly decreased compared to the previous quarter.

◆ Samsung to double HBM supply… 'Timely development of HBM4'

Samsung Electronics is expected to focus on expanding its HBM supply in order to take the lead in the semiconductor business. This year, it plans to supply HBM3E to NVIDIA and will need to address challenges such as ▲timely development of HBM4 and ▲countering competitors, including those from China.

On the 31st, Bloomberg reported, citing anonymous sources, that Samsung Electronics obtained approval from NVIDIA to supply HBM3E 8-layer memory last month. However, this possibility is considered low, as Samsung had indicated that HBM revenue would actually decrease in the first quarter of this year due to a temporary demand gap. Analysts believe that if Samsung were to supply HBM3E to NVIDIA, there would be no such demand gap.

Despite this, Samsung plans to directly confront the crisis by flexibly producing legacy (older) DRAM and focusing on the high-value HBM production. Samsung stated, "Customer demand will rapidly shift from HBM3E 8-layer to 12-layer after the second quarter of this year," adding, "We plan to double the HBM supply compared to last year to meet customer demand." It further revealed, "For 16-layer products, we have created samples and delivered them to major customers." At the same time, Samsung is redesigning HBM3E and pushing forward with the development of HBM4.

◆ DeepSeek 'positive outlook' possible... Urgent need for 52-hour workweek regulation.

In addition, there is analysis suggesting that the shock from the Chinese AI startup "DeepSeek" could work as a positive for Samsung Electronics. While U.S. AI companies use NVIDIA's high-cost, high-performance GPU H100, DeepSeek developed its product in just two months using around 2,000 relatively low-performance H800 chips. This has raised the possibility in the AI industry that high-performance GPUs from NVIDIA may not always be necessary.

As a result, the introduction of new technology could lead to shifts in the industry ecosystem, which may present long-term opportunities for Samsung Electronics in the AI market.

On the 31st, Samsung Electronics commented during a conference call regarding DeepSeek, stating, "There will be both long-term opportunities and short-term risks in the market." They also noted, "As we supply HBM, which is needed for GPUs, to various customers, we are monitoring the situation considering different scenarios."

Meanwhile, the potential abolition of the 52-hour workweek regulation in the domestic semiconductor industry is also seen as a positive factor. There are suggestions that lifting the work-hour restrictions would be necessary to outpace Chinese companies and strengthen semiconductor competitiveness. Delays in deliveries due to work-hour regulations have been reported as a common issue. The industry believes that the fastest way to lift the regulations would be to introduce special provisions for semiconductor law currently under discussion in the National Assembly. If economic compensation for worker rights protection and health safeguards are also established, it is believed that this would significantly contribute to enhancing medium- to long-term semiconductor competitiveness.

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