Samsung HBM Chips in High Demand as Chinese Firms Prepare for US Trade Curbs

As the United States prepares to impose new export controls, Chinese companies like Huawei and Baidu are stockpiling Samsung's high bandwidth memory chips to maintain their technological edge, sources say.

Chinese Companies Stockpile Samsung Chips

According to three sources, Chinese IT companies like Huawei and Baidu, together with startups, are hoarding high bandwidth memory (HBM) semiconductors from Samsung Electronics in preparation for potential restrictions on shipments to China by the United States.

An insider told us that in the first half of 2024, China accounted for almost 30% of Samsung's HBM chip income, thanks to the companies' increased purchases of AI-capable chips since the beginning of the year.

These actions demonstrate China's preparations to maintain its technological goals in the face of intensifying trade tensions with the United States and other Western countries. Additionally, they demonstrate the effects of the conflicts on the worldwide supply chain of semiconductors.

US to Impose New Export Controls

Reuters reported last week that sources have indicated that the United States is planning to announce an export control package this month. The package will place new limitations on shipments related to China's semiconductor industry.

Those same sources also mentioned that the package is supposed to detail how to limit access to memory chips with high bandwidth. Although it chose not to comment, this week, the U.S. Department of Commerce stated that it is always evaluating the changing threat landscape and revising export regulations "to protect U.S. national security and safeguard our technological ecosystem."

Reuters could not ascertain the specifics of the suggested HBM limitations or their effect on China.

Advanced processors, like Nvidia's GPUs, which can be employed for generative AI tasks, rely heavily on HBM chips.

South Korean companies SK Hynix and Samsung, as well as American firm Micron Technology, are the only three big players in the HBM chip market.

Sources acquainted with China's interest in HBM claimed that the country's chip demand has been concentrated on the HBM2E model, which is two generations behind the most advanced version, HBM3E. There is a scarcity of advanced models due to the worldwide increase in AI.

China's High Demand for Samsung HBM Chips

"Given that its domestic technology development is not yet fully mature, China's demand for Samsung's HBM has become exceptionally high, as other manufacturers’ capacities are already fully booked by American AI companies," commented Nori Chiou of Singapore-based White Oak Capital Partners.

Some companies, including Tencent and satellite manufacturers, have been purchasing HBM chips from China, although it is difficult to put a price on them. The chip design startup Haawking reportedly placed an order with Samsung for HBM chips not long ago, according to one of the sources.

Additionally, one source claims that Huawei's powerful Ascend AI chip is built utilizing Samsung HBM2E semiconductors.

MSN shares that neither Samsung nor SK Hynix will comment. Requests for comment were not responded to by Micron, Baidu, Huawei, Tencent, or Haawking. The sources preferred to remain anonymous because the subject matter is delicate.

According to a previous Reuters story, Chinese manufacturers have made progress in making HBM. Huawei and memory chipmaker CXMT are currently concentrating on developing HBM2 chips, which are three generations behind the HBM3E type.

However, the new rule from the United States could affect those endeavors.

Sources informed about the sales claimed that Samsung would be hit harder by restrictions on HBM supplies to China than its main competitors, who depend less on the Chinese market.

According to their sources, Micron has stopped exporting HBM devices to China since last year, while SK Hynix is concentrating on producing sophisticated HBM chips for customers like Nvidia.

SK Hynix's HBM chips were sold out for this year and practically sold out for 2025. Earlier this year, the company announced that it is altering manufacturing to enhance HBM3E output.