Tech Newsround – Samsung & Microsoft

Samsung Q1 25 – Welcome relief

• Samsung reported good results as smartphones and legacy DRAM fared better than expected, but the key catalyst for recovery which is the qualification of Samsung’s HBM4 at Nvidia, remains a hurdle yet to be cleared.
• Preliminary Q1 25 revenues and operating profits came in at KRW79tn / KRW6.6tn ahead of estimates of KRW76.6tn / KRW5.7tn.
• This was largely unexpected as demand for its new flagship smartphone seems to have been somewhat better than forecast while Chinese customers have been stockpiling commodity DRAM due to the geopolitical uncertainty.
• This pertains to both the potential for further restrictions on technology imports from the US Department of Commerce and the uncertainty around the new tariff regimes.
• This serves as a solid foundation for the recovery but the elephant in the room remains unaddressed.
• This is Samsung’s ability to compete in high bandwidth memory (HBM) that is needed in AI data centres to support both training and inference.
• Memory is often the bottleneck in the data centre rather than GPU speed or capacity, and so meeting or exceeding the required criteria is crucial to be a supplier.
• This is where Samsung has gone badly wrong as its HBM3e product has not been good enough to qualify with Nvidia as a supplier.
• Samsung has effectively given up on 3^rd generation and is putting all of its efforts into HBM4 which will start to take over from HBM3e towards the end of 2025 with volume in 2026.
• This failure has cost Samsung 40% of its market capitalisation creating an opportunity as its history has shown that it has the depth of corporate character to recover from substantial setbacks.
• This is why I own the shares and I think that over the next 12 to 24 months it will qualify with Nvidia, take share in HBM4 and return to around KRW85,000.
• I own a position in Samsung Electronics and I am looking for qualification at Nvidia as the catalyst for a rally in the share price.

Microsoft Copilot – Memory marketing.

• Microsoft celebrated its 50^th birthday by launching the next version of Copilot which it hopes will take Copilot from an oddity that is present mostly on the new long battery life Arm Windows laptops to something that has greater use for both consumer and enterprise.

• • First, Consumer: where a slew of new features have been launched as well as the ability to customise the look and feel of the agent.
  • Copilot will now be able to see what is on the screen, interact with supported apps (like Photoshop) making them easier to use and help with planning trips, shopping and so on.
  • Microsoft is also emulating OpenAI (and everyone else) by launching a Deep Research function bringing it up to date with everyone else.
  • Microsoft also demonstrated its agent actually doing things like filling in online forms with more abilities promised in future updates.
  • These agents will now have (with user permission) the ability to become more customised to understand the user’s preferences.
  • Microsoft refers to this as memory which is a neat marketing trick as short-term memory is a known problem that AI agents struggle with.
  • Microsoft has not solved this problem with the new Copilot as all it is really doing is using the knowledge graph of the user’s profile to adjust the weights of the model that is being used.
  • Second, Enterprise: where the launches are aimed at developers who will be developing custom agents for companies.
  • This is Microsoft enhancing its play for the ecosystem and at the same time deepening its divorce from OpenAI.
  • Microsoft no longer believes it needs to be at the cutting edge of AI performance and appears to me to be embracing some of the realities that its competitors continue to deny.
  • The idea now is not to have one agent that does everything but many agents all of whom are trained to do one task but to a high standard.
  • There is no reason why these can not work together which is what the new multi-agent framework is about.
  • Using this, developers can put together specific use cases that use numerous agents that together can complete a more complex task.
  • This is very similar to Nvidia’s Nvidia Inference Microservices (NIMs) and its AI foundry with the main difference being that Microsoft’s will be agnostic to the silicon it runs on.
• These launches are indicative of Microsoft’s evolving philosophy towards AI where it has publicly said that AI models are commoditising and that it does not need to be at the bleeding edge.
• I think that this is a result of its rapidly souring relationship with OpenAI as well as the realisation that the kind of dependency on OpenAI it was espousing was creating significant risk, especially given the precarious nature of OpenAI’s governance (see here).
• Although the case for agents is yet to be proven, Microsoft is in a good position to leverage the high share of personal computing and enterprise software to be one of the major players in the AI ecosystem.
• There still remains everything to play for and I suspect that 2025 will be all about wooing developers into building on these platforms that will determine the winners and losers of the AI Ecosystem.