Samsung Electronics is bolstering its HBM competitiveness through significant investments in advanced packaging. Upgrades are underway at its Cheonan facility in South Korea, and its Samsung Electronics Suzhou Semiconductor (SESS) plant in China is receiving new semiconductor production tools. According to Seoul Economic Daily and Businesskorea, Samsung secured contracts worth KRW20 billion (approx. US$14.32 million) in the third quarter of 2024 to drive this expansion.
Samsung's semiconductor packaging operations are anchored in Onyang, Cheonan, and Suzhou. The company is reportedly exploring additional capacity at its Samsung Display Cheonan plant, according to Anue. These measures underscore Samsung's strategic efforts to secure a stronger foothold in the expanding HBM market.
Strategic expansion and leadership
To reinforce its semiconductor packaging capabilities, Samsung is investing heavily in domestic and international facilities. The SESS plant in China, Samsung's sole overseas testing and packaging base, recently appointed Vice President Jung-sam Lee as head, filling a vacancy since last year, Businesskorea reports. This leadership change highlights Samsung's focus on enhancing packaging process innovation and efficiency.
In South Korea, Samsung is fast-tracking its domestic expansion efforts. The company signed an agreement with South Chungcheong Province and Cheonan City to build the country's largest advanced packaging facility. Construction will begin in December 2024 on a 280,000-square-meter site leased from Samsung Display, focusing on next-gen HBM products such as HBM3E and HBM4, with completion set for late 2027, according to ETNews.
Samsung's packaging operations currently span the Cheonan and Onyang campuses. With the Onyang facility at full capacity, the new Cheonan plant will support HBM mass production and expand stacking processes to align with growing HBM DRAM demand.
Globally, Samsung is set to launch its Advanced Packaging Lab (APL) in Yokohama, Japan, by the end of 2024. The facility, under construction since late 2023, will focus on high-value chips for next-gen HBM, AI, and 5G communications. Samsung has earmarked JPY40 billion (approx. US$260.1 million) for the project through 2028, investing in clean rooms, workforce expansion, and advanced packaging innovations.
Global competition intensifies
Yole Développement data shows Intel and TSMC leading global advanced packaging investments in 2024, with market shares of 32% and 27% respectively. ASE Technology ranks third, while Samsung holds fourth place.
Tesla's interest drives innovation
Tesla has requested HBM4 samples from both Samsung and SK Hynix, with a supplier decision expected post-testing, KED Global reports. As HBM4 memory requires advanced customization, innovative packaging capabilities are now pivotal in meeting client performance demands.
Samsung is ramping up investments in advanced packaging to challenge SK Hynix. The SESS thus plays a key role in driving innovation and production efficiency. HBM4 marks a leap in stack layers from 8 to 12, with 16-layer stacks pushing a shift from 2.5D to 3D packaging.
To maintain its competitive edge, Samsung is focusing on hybrid bonding technology. Industry experts indicate that the company seeks to capitalize on HBM4 advancements to enhance its packaging capabilities and expand mass production, according to Businesskorea.
Market growth and competition
Competition between Samsung and SK Hynix is heating up as the HBM4 market is projected to expand from US$4 billion in 2023 to US$33 billion by 2027, fueled by growing demand in AI and automotive sectors, reports Morgan Stanley. SK Hynix currently leads the market, supplying Nvidia, which controls over 90% of the global AI chip sector.
Samsung is countering SK Hynix's market dominance by partnering with TSMC for HBM4 base die production, according to TrendForce. This collaboration strengthens Samsung's turnkey HBM strategy that spans design, production, and foundry services. Additionally, Samsung plans to use its advanced 4nm process for HBM4 mass production, targeting major clients like Tesla.
Chinese market developments
The surge in AI computing demand has established HBM as the preferred solution for high-performance applications. Despite representing just 5% of shipments, HBM contributes a substantial 20% of DRAM revenue, according to Sina. Currently, only industry leaders like Samsung, SK Hynix, and Micron possess the capacity for large-scale HBM production, with further expansion plans underway.
Amid this growth, speculation surrounds Longforce, a Longsys subsidiary, and prominent Chinese memory chipmaker, regarding its potential to leverage its Suzhou R&D center for trial HBM production.
Although Longforce has the capability for high wafer stacking packaging, a critical component of HBM, it is not yet equipped for full-scale HBM chip production. The company remains focused on monitoring industry advancements and ramping up R&D efforts to capitalize on future opportunities.
