Samsung to supply substrates for Nvidia AI inference chip

Samsung Electro-Mechanics is surging on expectations of expanded positioning within the artificial intelligence (AI) core component supply chain. The rally is attributed to investor sentiment fueled by prospects of a strengthened strategic role in the Nvidia-centered AI ecosystem.

According to the Korea Exchange on January 10, Samsung Electro-Mechanics was trading at 579,000 won as of 9:45 a.m., up more than 12% from the previous trading day. Securities analysts note that Samsung Electro-Mechanics’ structural competitiveness is being highlighted amid the expanding AI semiconductor market.

Meritz Securities stated in a report released the same day that Samsung Electro-Mechanics has a unique business structure capable of simultaneously supplying silicon capacitors and Ajinomoto Build-up Film (ABF) substrates. Samsung Electro-Mechanics is effectively the only company that supplies both products, which are considered core components in the AI era.

Prospects have also emerged that Samsung Electro-Mechanics’ role will further expand as Nvidia builds out its next-generation AI infrastructure. Beyond supplying NV switches for GPU connections, the company is highly likely to enter as a core partner in the supply chain for Language Processing Unit (LPU) substrates, newly unveiled for AI inference applications. This is significant as it could lead to strengthened strategic positioning within Nvidia beyond simple component supply.

Mid-to-long-term growth expectations are rising as demand for ABF substrates for LPUs is expected to increase substantially following changes to Nvidia’s rack architecture. Should the supply scope expand to Data Processing Units (DPUs) and next-generation communication platforms, Samsung Electro-Mechanics’ benefits are projected to grow even further.

Reflecting these expectations, Meritz Securities raised its target price for Samsung Electro-Mechanics from 590,000 won to 700,000 won, an increase of 18.7%. The previous day’s closing price was 516,000 won. Seoul Economic Daily