(Bloomberg) -- Samsung Electronics Co. gained its most in more than six months after Nikkei Asia reported Nvidia Corp. is looking to buy its high-bandwidth memory chips, marking a milestone for Korea’s largest company.

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The report shored up investor hopes that Samsung — long the dominant player in global memory semiconductors — will close the gap with smaller rival SK Hynix Inc. in the critical field of AI. On Wednesday, executives told shareholders at their annual meeting Samsung aims to be first in the global chip market within two to three years, including by investing in capacity for high-bandwidth memory, or HBM. This type of semiconductor is best suited to work with the AI accelerators that Nvidia specializes in. Samsung’s chip business should recover to 2022 levels this year, as a longstanding market slump begins to end, executives said.

Already the undisputed leader in AI semiconductors, Nvidia this week unveiled the next generation of its hardware, called Blackwell. Samsung’s shares surged as much as 6% in Seoul after Nvidia founder Jensen Huang told reporters his company planned to also use it as an HBM supplier, according to the newspaper. “I value our partnership with SK Hynix and Samsung very incredibly,” it quoted Huang as saying.

Huang’s endorsement of various partners this week has boosted shares in the likes of Synopsys Inc. Hynix’s own head-start in HBM — which is ideally designed to make the most of Nvidia’s chips — had helped its shares double in value since the start of 2023, far outstripping Samsung’s roughly 39% gain.

“We see a very high possibility that Samsung will qualify for supplying HBM3E to Nvidia’s latest chips,” said Sanjeev Rana, head of Korea Research at CLSA. “The demand for Nvidia’s GPUs is very strong, but given the limited HBM capacity at Hynix and Micron, it is very likely that Nvidia will need to rely on another supplier to meet the strong demand for its chips.”

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HBM is a key part of Samsung’s effort to be the world’s leading chipmaker, as the one part of the memory market where Samsung doesn’t enjoy a clear lead over its competition. The company said its HBM sales rose by more than 40% in the December quarter, and that memory demand showed signs of recovery.

But Hynix is also investing in capacity and technology to safeguard its advantage. Among other things, it’s placing a bet on advanced chip packaging that it thinks will grant it a crucial edge. Samsung is pushing its own advanced packaging business after setting up a dedicated team last year, said Kyung Kye-Hyun, who heads the semiconductor business.

Read More: SK Hynix Invests $1 Billion in Key AI Memory Chip Technology

Beyond memory, the Suwon-based firm is working to expand its foundry business — fabricating logic chips to the design specification of outside customers, such as Nvidia — and take a larger share of the market now dominated by Taiwan Semiconductor Manufacturing Co.

--With assistance from Shinhye Kang and Vlad Savov.

(Updates with market context from the second paragraph)

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