How Samsung fell behind in the AI boom leading to a $126 billion wipeout
A Samsung Electronics Co. 12-layer HBM3E, top, and other DDR modules arranged in Seoul, South Korea, on Thursday, April 4, 2024.
SeongJoon Cho | Bloomberg | Getty Images
Samsung Electronics was once the dominant player in a type of semiconductor known as memory, putting it in a great position to capitalize on the boom of artificial intelligence.
But the South Korea electronics giant has now fallen behind its long-time rival SK Hynix in next-generation chips that have been key component for AI silicon leader Nvidia. The result? Samsung’s profit has plunged, around $126 billion has been wiped off its market value, according to data from S&P Capital IQ, and an executive issued a rare public apology about the company’s recent financial performance.
Memory is a critical type of chip used to store data, and it can be found in a plethora of devices from smartphones to laptops. For years, Samsung was the undeniable leader in this technology, ahead of South Korean rival SK Hynix and U.S. competitor Micron.
But as AI applications such as OpenAI’s ChatGPT rose in popularity, the underlying infrastructure required to train the huge models they rely on became a bigger focus. Nvidia has emerged as the top player in this space with its graphics processing units (GPUs) that have become the gold standard used by tech giants for AI training.
A crucial part of that semiconductor architecture is high-bandwidth memory, or HBM. This next generation of memory involves stacking multiple dynamic random access memory (DRAM) chips, but it had a small market before the AI boom.
That’s where Samsung got caught out and failed to invest.
“HBM has been a very niche product … for a long time and Samsung has not focused its resources on its development,” Kazunori Ito, director of equity research at Morningstar, told CNBC by email.
“Due to the difficulty of the technology involved in stacking DRAMs and the small size of the addressable market, it was believed that the high development costs were not justified.”
SK Hynix saw this opportunity. The company aggressively launched HBM chips which were approved for use in Nvidia architecture and, in the process, the South Korean firm established a close relationship with the U.S. giant. Nvidia’s CEO even asked the company to speed up supply of its next generation chip, underscoring the importance of HBM to its products.
SK Hynix posted record quarterly operating profit in the September quarter.
“With strong R&D (research and development) investments and established industry partnerships, SK Hynix maintains an edge in both HBM innovation and market penetration,” Brady Wang, associated director at Counterpoint Research, told CNBC by email.
Samsung told CNBC that, in the third quarter, total HBM sales grew more than 70% quarter-on-quarter. The tech giant added that the current product known as HBM3E is in mass production and generating sales.
The South Korean tech company noted that development for its next-generation HBM4 is “underway according to plan” and that the company is targeting starting “mass production” in the second half of 2025.
Can Samsung make a comeback?
Analysts said that Samsung is lagging behind competitors for a number of reasons, including underinvestment in HBM and the fact that it is not a first-mover.
“It is fair to say that Samsung has not been able to close the gap with SK Hynix on the HBM development roadmap,” Morningstar’s Ito said.
Samsung’s ability to make a comeback in the short term appears to be closely linked to Nvidia.
A company must pass a strict qualification process before Nvidia approves it as a HBM supplier — and Samsung has not yet completed this verification. But a green light from Nvidia could open the door for Samsung to return to growth and compete more effectively with SK Hynix, according to analysts.
“Since NVIDIA holds more than 90% of the AI chip market, where most HBMs are used, NVIDIA’s approval is critical for Samsung to benefit from the robust demand for AI servers,” Ito said.
A Samsung spokesperson said that the company has made “meaning progress” regarding HBM3E and has “completed an important phase in the qualification process.”
“We expect to start expanding sales in the fourth quarter,” the spokesperson said.
Meanwhile, Wang noted that Samsung’s strength in research and development, as well as the company’s semiconductor manufacturing capacity that could help it catch up to SK Hynix.
Technology
CyberArk’s stock jumps on report Palo Alto Networks in talks to buy company for over $20 billion
Nikesh Arora, CEO of Palo Alto Networks, looks on during the closing bell at the Nasdaq Market in New York City, U.S., March 25, 2025.
Jeenah Moon | Reuters
CyberArk shares soared as much as 18% on Tuesday after The Wall Street Journal reported that cybersecurity provider Palo Alto Networks has held discussions to buy the identity management software maker for over $20 billion.
Cloud security is becoming an increasingly critical piece of the enterprise tech stack, especially as rapid advancements in artificial intelligence bring with them a whole new set of threats, and as ransomware attacks become more commonplace.
Founded in 2005, Palo Alto Networks has emerged in recent years as a consolidator in the cybersecurity industry and has grown into the biggest player in the space by market cap, with a valuation of over $130 billion. CEO Nikesh Arora, who was appointed to the job in 2018, has been on a spending spree, snapping up Protect AI in a deal that closed in July, and in 2023 buying Talon Cyber Security, Dig Security and Zycada Networks.
But CyberArk would represent by far Arora’s biggest bet yet. The Israeli company, which went public in 2014, provides technology that helps companies streamline the process of logging on to applications for employees.
CyberArk faces competition from Microsoft, Okta and IBM‘s HashiCorp. Another rival, SailPoint, returned to the public markets in February.
With Tuesday’s rally, CyberArk shares climbed to a record, surpassing their prior all-time high reached in February. The stock is up 29% this year, pushing the company’s market cap to almost $21 billion, after jumping 52% in 2024. Palo Alto shares, meanwhile, slid 3.5% on the report and are now up about 9% for the year.
Representatives from Palo Alto Networks and CyberArk declined to comment.
During the first quarter, CyberArk generated around $11.5 million in net income on around $318 million in revenue, which was up 43% from a year earlier.
It’s been an active stretch for big deals in the cyber market. Google said in March that it was spending $32 billion on Wiz, its largest acquisition on record by far, and a purchase intended to bolster its cloud business with greater AI security technology.
Networking giant Cisco also made its biggest deal ever in the security space, buying Splunk in 2023 for $28 billion. Splunk’s technology helps businesses monitor and analyze their data to minimize the risk of hacks and resolve technical issues faster.
— CNBC’s Ari Levy contributed to this report
The Rebel-Quad is the second-generation product from Rebellions and is made up of four Rebel AI chips. Rebellions, a South Korean firm, is looking to rival companies like Nvidia in AI chips.
Rebellions
South Korean artificial intelligence chip startup Rebellions has raised money from tech giant Samsung and is targeting a funding round of up to $200 million ahead of a public listing, the company’s management told CNBC on Tuesday.
Last year, Rebellions merged with another startup in South Korea called Sapeon, creating a firm that is being positioned as one of the country’s promising rivals to Nvidia.
Rebellions is currently raising money and is targeting funding of between $150 million and $200 million, Sungkyue Shin, chief financial officer of the startup, told CNBC on Tuesday.
Samsung’s investment in Rebellions last week was part of that, Shin said, though he declined to say how much the tech giant poured in.
Since its founding in 2020, Rebellions has raised $220 million, Shin added.
The current funding round is ongoing and Shin said Rebellions is talking to its current investors as well as investors in Korea and globally to participate in the capital raise. Rebellions has some big investors, including South Korean chip giant SK Hynix, telecommunication firms SK Telecom and Korea Telecom, and Saudi Arabian oil giant Aramco.
Rebellions was last valued at $1 billion. Shin said the current round of funding would push the valuation over $1 billion but declined to give specific figure.
Rebellions is aiming for an initial public offering once this funding round has closed.
“Our master plan is going public,” Shin said.
Rebellions designs chips that are focused on AI inferencing rather than training. Inferencing is when a pre-trained AI model interprets live data to come up with a result, much like the answers that are produced by popular chatbots.
With the backing of major South Korean firms and investors, Rebellions is hoping to make a global play where it will look to challenge Nvidia and AMD as well as a slew of other startups in the inferencing space.
Samsung collaboration
Rebellions has been working with Samsung to bring its second-generation chip, Rebel, to market. Samsung owns a chip manufacturing business, also known as foundry. Four Rebel chips are put together to make the Rebel-Quad, the product that Rebellions will eventually sell. A Rebellions spokesperson said the chip will be launched later this year.
The funding will partly go toward Rebellions’ product development. Rebellions is currently testing its chip which will eventually be produced on a larger scale by Samsung.
“Initial results have been very promising,” Sunghyun Park, CEO of Rebellions, told CNBC on Tuesday.
Park said Samsung invested in Rebellions partly because of the the good results that the chip has so far produced.
Samsung is manufacturing Rebellions’ semiconductor using its 4 nanometer process, which is among the leading-edge chipmaking nodes. For comparison, Nvidia’s current Blackwell chips use the 4 nanometer process from Taiwan Semiconductor Manufacturing Co. Rebellions will also use Samsung’s high bandwidth memory, known as HBM3e. This type of memory is stacked and is required to handle large data processing loads.
That could turn out to be a strategic win for Samsung, which is a very distant second to TSMC in terms of market share in the foundry business. Samsung has been looking to boost its chipmaking division. Samsung Electronics recently entered into a $16.5 billion contract for supplying semiconductors to Tesla.
If Rebellions manages to find a large customer base, this could give Samsung a major customer for its foundry business.
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