How Samsung Fell Behind in the AI Boom - and Lost $126 Billion in Market Value (cnbc.com)
- Reference: 0175440205
- News link: https://hardware.slashdot.org/story/24/11/09/1853256/how-samsung-fell-behind-in-the-ai-boom---and-lost-126-billion-in-market-value
- Source link: https://www.cnbc.com/2024/11/08/how-samsung-fell-behind-in-the-ai-boom-behind-rival-sk-hynix.html
It's gotten so bad that "an executive [2]issued a rare public apology about the company's recent financial performance."
> [A]s 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...
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> SK Hynix saw this opportunity. The company [3]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 [4]asked the company to speed up supply of its next generation chip, underscoring the importance of HBM to its products. SK Hynix posted [5]record quarterly operating profit in the September quarter...
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> 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," said Kazunori Ito [director of equity research at Morningstar]. 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.
[1] https://www.cnbc.com/2024/11/08/how-samsung-fell-behind-in-the-ai-boom-behind-rival-sk-hynix.html
[2] https://www.cnbc.com/2024/10/08/samsung-issues-lengthy-apology-after-results-read-the-statement.html
[3] https://www.cnbc.com/2024/09/26/sk-hynix-to-start-mass-production-of-new-hbm3e-chip.html
[4] https://www.cnbc.com/2024/11/04/sk-hynix-shares-rally-after-nvidias-huang-asks-firm-to-speed-up-chip.html
[5] https://www.cnbc.com/2024/10/24/nvidia-supplier-sk-hynix-posts-record-quarterly-profit-beating-expectations.html
Yay for us (Score:2)
"Samsung is lagging behind competitors for a number of reasons"
Good for them? I don't see anyone clamoring to 'get a phone (TV, whatever) with AI in it'. Isn't Amazon's "Alexa" already dying off in popularity, too?
Further, isn't this just warming the planet that much faster?
AI Gear, not AI is where the profit is (Score:3)
> Good for them? I don't see anyone clamoring to 'get a phone (TV, whatever) with AI in it'. Isn't Amazon's "Alexa" already dying off in popularity, too?
The article is about AI chips, not AI services. Generative AI is a bullshit bubble. However, the sales of chips to companies in this bubble is not. Even when the Generative AI bubble pops, we'll still need the same chips for Machine Vision, Machine Learning (the actual useful, practical AI) or even just video games. All 3 are substantial markets. So while nVIdia's insane valuation will drop, the company will be just fine so long as they're making video games cards or people want machine vision or machi
Re: (Score:2)
>> Good for them? I don't see anyone clamoring to 'get a phone (TV, whatever) with AI in it'. Isn't Amazon's "Alexa" already dying off in popularity, too?
> The article is about AI chips, not AI services. Generative AI is a bullshit bubble. However, the sales of chips to companies in this bubble is not. Even when the Generative AI bubble pops, we'll still need the same chips for Machine Vision, Machine Learning (the actual useful, practical AI) or even just video games. All 3 are substantial markets. So while nVIdia's insane valuation will drop, the company will be just fine so long as they're making video games cards or people want machine vision or machine learning.
> ChatGPT, is a scam. Generative AI coding solutions are garbage. This will become painfully obvious as Apple Intelligence rolls out, I predict, but would LOVE to be proven wrong. Either this will be an amazing service...or this will be a failure and future meme. I think most will be very disappointed with Apple Intelligence and view it as blockchain/bitcoin 2.0.
> But say I'm right and the entire generative AI industry drops to 10% of it's current valuation, nVidia and Samsung (had they invested) would be JUST FINE...no sky high valuation, but they'll have healthy products selling these processors to people working on machine vision, like sorting robots or the various machine learning (spam-detection/security products) or even just video games or streaming boxes and such.
> Think the gold rush in the USA. The money wasn't made by gold miners, but the ones selling pick axes and famously Levi Straus selling the gold miners jeans. They're upset at Samsung for not selling pick axes in this metaphor, not because they didn't open a gold mine.
I don't think that Apple is aiming for the first, fastest, or largest-selling, AI; but rather the most Secure and Privacy-Focused.
Something that makes them refreshingly quite unique in this space.
Drive space and VR, too (Score:2)
AI also needs a bunch of nice fast storage to feed the data in and store the results, but Samsung raised prices enough that people are skipping off to other vendors for drives.
This is on top of "VR needs good, small, high-res displays," but Samsung isn't competing in that, either.
Re: (Score:2)
> Samsung's most recent quarterly financials:
> Revenue - Up 17%
> Net income - Up 77%
> Net profit margin - Up 51%
> Operating income - Up 277%
> All companies should be doing that poorly.
Citations, please.
"Market value" is irrelevant (Score:2)
It is not "value" and it is not determined by the actual market. Samsung is a company that understand strategic planning and solid products. They will still be around when nobody even remembers ChatGPT.
Correction (Score:3)
"AI bubble" until consistently proven otherwise.
Re: (Score:2)
> "AI bubble" until consistently proven otherwise.
It's a good example of why the average person is extremely unlikely to ever become rich by investing. Any company that even shows the remotest possibility of turning some semblance of a profit at some point in the future, gets dog-piled on by 1%ers until the value of their stock is so grossly out of proportion with the company's earning potential. At that point, the stock becomes a huge risk to gamble your rent money on.
There's no doubt that LLMs will make money, but probably not as much as Wall Street is