Samsung Ramps Up Push to Close AI Gap Amid Profit Pressure

Samsung Electronics (KRX: 005930) is accelerating its efforts to catch up in the global AI race, focusing heavily on high-bandwidth memory (HBM) chips as demand surges from hyperscalers and chipmakers. The urgency comes as its semiconductor division struggles with falling profits and delivery delays tied to AI chip components.

The company recently appointed Jun Young-hyun as co-CEO of its chip unit, signaling a shift in strategy. In a rare admission, Young-hyun stated that Samsung had been “late in reading market trends,” but vowed to recover ground, particularly in HBM—a segment now dominated by SK Hynix (KRX: 000660).

“AI for All” Moves from Vision to Execution

At CES 2025, Samsung unveiled its “AI for All” strategy, highlighting plans to integrate artificial intelligence across its consumer hardware ecosystem. From Galaxy smartphones and wearables to smart TVs and home appliances, the company aims to embed both on-device and cloud-based intelligence into everyday experiences.

The centerpiece of this rollout is Galaxy AI, a feature suite launched with the Galaxy S24 series. It includes real-time translation, AI-powered image editing, contextual assistance, and more. Samsung projects the features will reach over 400 million devices globally by the end of 2025. Strategic integration with Google’s Gemini AI adds cloud scale to its offering, while maintaining on-device options for privacy.

Memory Bottlenecks Challenge AI Ambitions

Despite the marketing push, Samsung’s financial results reveal friction in execution. The chip division saw operating income fall sharply in Q2, weighed down by slow certification processes and export restrictions. While SK Hynix has already begun shipping HBM3E to Nvidia (NASDAQ: NVDA), Samsung is still awaiting full qualification—putting it behind in the race to serve key clients in AI infrastructure.

Samsung has since expanded collaboration with AMD (NASDAQ: AMD) and other partners, but volume ramp-up remains behind initial guidance. The delays are material: memory chips are a backbone of large language models and data center AI workloads, making Samsung’s ability to catch up critical for its longer-term competitiveness.

Strategic Pressure from Rivals

SK Hynix now holds the top spot in global DRAM share, a position Samsung once dominated. With SK securing 36% of the global DRAM market and leading HBM shipments, the competitive gap has become highly visible.

Samsung is responding by scaling investments through its Catalyst Fund and global innovation centers, aimed at building out AI-specific infrastructure and partnerships with emerging software players. Still, sentiment hinges on whether these moves translate into timely product delivery and regained market share.

What Traders Are Watching

For traders, the key question is whether Samsung can reverse recent stumbles and reposition itself as a leading AI memory supplier. With hardware margins under pressure and consumer electronics facing saturation, AI chips and related infrastructure represent a core strategic lever.

The stock has been volatile, with optimism around AI offset by lagging execution. Market focus now turns to Q2 earnings commentary and any update on Nvidia certification or regulatory clearance. Meanwhile, early adoption of Galaxy AI features will offer clues on the consumer side of the AI equation.

Tips for Traders

• Samsung (KRX: 005930) could see momentum shift if it announces certified HBM shipments to Nvidia or AMD within Q3.

• Monitor SK Hynix (KRX: 000660) for peer comparison and margin dynamics—Samsung's lag is both a competitive risk and a catch-up opportunity.

• Follow Galaxy AI user feedback and adoption metrics; strong traction may support bullish sentiment around consumer AI monetization.

• Watch for updates on U.S. export restrictions and trade policy—key drivers of Samsung’s ability to scale AI memory supply chains.

• Tech-sector ETF flows may reflect reallocation between AI leaders; Samsung’s positioning will depend heavily on execution through year-end.