New Samsung chip division head says committed to overcoming challenges in AI era

By Ju-min Park and Heekyong Yang

SEOUL (Reuters) -Samsung Electronics' new head of its chip division has called on staff to work together to regain the company's status as a top semiconductor company, adding he is committed to overcoming challenges in an age of artificial intelligence.

The South Korean tech giant has fallen behind rivals SK Hynix and Micron Technology in high bandwidth memory (HBM) chips which are in high demand for use in AI processors.

Citing a "chip crisis", it replaced its semiconductor chief this month with Young Hyun Jun, who led Samsung's memory chip business from 2014 to 2017 after working on the development of DRAM and flash memory chips.

"This (AI era) poses a great challenge to us, but if we take the right direction and respond, it can become an unprecedented new opportunity," Jun, 63, said in a May 30 letter to staff which was seen by Reuters.

Samsung's latest HBM chips have yet to pass Nvidia's tests for use in the U.S. firm's AI processors due to heat and power consumption problems, three people briefed on the issues have said. Samsung said in response that "claims of failing due to heat and power consumption are not true," and that testing was "proceeding smoothly and as planned."

Its weakness in HBM has been noticed by investors. While shares in SK Hynix and Micron have both surged some 80% over the past year, Samsung's shares are up just 6%.

Thursday's letter also noted that Samsung's semiconductor division last year recorded its largest loss since the company was founded, that its foundry business has not been able to narrow the gap with a leading firm and that its system LSI business was also struggling.

A Samsung union has also threatened to stage the company's first walkout next week, calling for more transparency in pay as well as additional annual leave.

(Reporting by Ju-min Park and Heekyong Yang; Editing by Edwina Gibbs)