Samsung Electronics Looks to Remedy Chip Crisis with New Semiconductor Chief

Samsung looks to solve its ongoing chip crisis and compete in the ongoing chip race powering AI, by appointing a new chief in the company's semiconductor division.

Young Hyun Jun was named the new leader of the South Korean technology conglomerate's semiconductor division on Tuesday.

According to the Wall Street Journal, Jun used to be the CEO of Samsung Electronics' memory-chip division as well as the battery division of Samsung SDI.

He will take over for Kyehyun Kyung, who is set to follow Jun as the head of future business, which is the department responsible for devising future company plans.

SKOREA-ECONOMY-SAMSUNG — A Samsung flag (R) flutters outside the company's Seocho building in Seoul on April 30, 2024. Samsung Electronics said on April 30 that its first-quarter operating profits had risen nearly tenfold year-on-year -- a 931.8 percent increase -- amid recovering chip prices and growing demand. JUNG YEON-JE/AFP via Getty Images

(Photo: JUNG YEON-JE/AFP via Getty Images) A Samsung flag (R) flutters outside the company's Seocho building in Seoul on April 30, 2024. Samsung Electronics said on April 30 that its first-quarter operating profits had risen nearly tenfold year-on-year -- a 931.8 percent increase -- amid recovering chip prices and growing demand.

In addition to being the biggest memory chip manufacturer in the world, Samsung is a significant participant in the foundry, or contract chip, industry. Along with Taiwan Semiconductor Manufacturing Co. and Intel, it is one of the few companies that can produce the most advanced logic chips in the market.

Analysts reportedly stated that Samsung is presumably making this attempt to catch up in the market for high-end semiconductors used in AI, such as high bandwidth memory (HBM) chips, where it has lagged behind competitors like SK Hynix.

Analysts also noted that it is unusual for Samsung to replace a high-ranking job in the middle of the year, as most staff changes occur at the beginning of the year. Jun will be replaced as leader of the future business unit by Kye Hyun Kyung, the current chief of the chip division.

Samsung's Success amid the AI Race

Following the receipt of a $6.4 billion U.S. government grant last month, Samsung is planning to expand its chip-making facilities in Texas as it competes with rivals to build cutting-edge high-bandwidth memory chips and other AI devices.

As a result of its flagship semiconductor sector turning a profit due to increasing memory chip pricing, its net profit more than doubled in the first quarter. According to Samsung, there will be a significant market for HBM chips which power AI systems through the second half of 2024.

HBM Chip Demand

The competition for artificial intelligence continues to revolve around HBM chips, to the point where high-bandwidth memory chips from Micron and SK Hynix are reportedly almost sold out for the forthcoming year due to the increased demand for AI.

Artificial intelligence adoption has surged due to the need for high-performance memory chips for training LLMs, such as OpenAI's ChatGPT. These chips must save data from past contacts with users along with their preferences for LLMs to react to queries in a manner akin to that of a person.

In response to the surge in demand, SK Hynix intends to increase output. To do this, investments will be made in the Yongin semiconductor cluster in South Korea, the M15X fab in Cheongju, and state-of-the-art packaging facilities located in Indiana.

According to CNBC, big tech giants like Microsoft, Google, and Amazon are driving demand for AI processors by spending billions on LLM training to maintain their competitiveness.