According to CNBC the situation has deteriorated to the point where an executive issued a rare public apology about the company's recent financial performance.

The rise of AI applications such as OpenAI's ChatGPT has shifted focus to the infrastructure required to train the massive models they rely on. Nvidia has emerged as the leader in this space with its graphics processing units (GPUs), now the gold standard for AI training.

A critical component of this semiconductor architecture is high-bandwidth memory (HBM), which involves stacking multiple dynamic random access memory (DRAM) chips. Prior to the AI boom, HBM had a small market, a fact that caught Samsung off guard as it failed to invest adequately.

SK Hynix seized the day and aggressively launched HBM chips approved for use in Nvidia architecture, establishing a close relationship with the US tech giant.

Nvidia's CEO even requested the company to expedite the supply of its next-generation chip, highlighting the importance of HBM to Nvidia's products. Consequently, SK Hynix posted record quarterly operating profit in the September quarter.

Analysts believe Samsung is lagging behind its competitors for several reasons, including underinvestment in HBM and not being a first-mover.

Morningstar director of equity research Kazunori Ito said Samsung has not been able to close the gap with SK Hynix on the HBM development roadmap.

Samsung's short-term recovery appears closely linked to Nvidia, as the company must pass a stringent qualification process before Nvidia approves it as an HBM supplier. Should Samsung receive this approval, it could pave the way for the company to return to growth and compete more effectively with SK Hynix, analysts suggest.