Amid talks about Tesla potentially using Samsung’s advanced HBM chips in its AI processors, the company is working on increasing its production capacity. The Korean firm recently signed agreements to expand its semiconductor packaging facilities in China. This follows similar investments in its home country, South Korea.
Samsung aims to strengthen its HBM capacity
According to Business Korea, Samsung is ramping up its investments in HBM facilities to strengthen its position in advanced semiconductor packaging and lead the global supply chain. To this end, the company plans to allocate approximately $15 million to boost HBM4 chip production at its Suzhou plant in China. It aims to construct a new advanced packaging facility.
By improving its packaging capabilities, Samsung will enhance its technological competitiveness and narrow the gap with its main rival, SK Hynix. The latter is also a South Korean firm and is the current global leader in the HBM chip market. HBM chips are critical for AI applications as they enable efficient handling of resource-intensive AI tasks.
The Suzhou facility in China is currently Samsung’s primary testing and packaging base outside South Korea. The increased investment in this plant is aimed at fostering innovation in packaging processes and improving production efficiency. Packaging, a critical component of semiconductor development, involves shaping chips to integrate seamlessly into devices.
Tesla recently requested HBM4 samples from both Samsung and SK Hynix. The American electric vehicle (EV) maker plans to select a supplier after evaluating the samples. Samsung appears confident in its ability to meet Tesla’s requirements and secure the partnership, which could further expand its business opportunities in the AI and EV sectors.
Meanwhile, Samsung’s foundry division is struggling with poor yields of its advanced semiconductors, particularly the 3nm process. It upgraded from the FinFET to GAA transistor architecture in mid-2022 but hasn’t been able to achieve a healthy yield rate. The firm eyes a comeback with the 2nm process in late 2025, hoping to win big contracts. It remains to be seen whether Samsung Foundry can secure major manufacturing contracts anytime soon.
