Samsung’s AI Strategy Hits Variscite

30 August, 2025

Secretly diverts production lines for HBM memories. Samsung is responsible for approximately 20% of Variscite’s memory needs. Variscite may have to extend delivery times

Photo above: Variscite production floor at Kiryat Gat, Israel. Credit: Techtime

Samsung Electronics’ primary focus is currently on competing with Korea’s SK Hynix for manufacturing orders of memories for NVIDIA’s AI computers. As part of this effort, it is even diverting the output of memory production lines from industrial products toward manufacturing of HBM memory devices needed in the largescale AI data centers. This move is being carried out quietly, without public press releases or announcements to investors. Nevertheless, it is already being felt keenly in the industry. The manufacturer of Industrial System on Modules, Israel-based Variscite, is now dealing with a memory shortage as a result of Samsung’s clandestine move.

The Sales Engine of Telsys

Variscite isa fully-owned subsidiary of Telsys. In its Q2 2025 earnings report published last week, Telsys explained that Samsung supplies Variscite with about 20% of the memory components it uses. “Due to delays in the supply of memory components,” a Samsung memory supplier explained to Variscite’s management, “the company has decided to divert its memory production line in favor of manufacturing products for the AI market.”

Samsung has not released an official statement on the move, but the information was received verbally in July 2025 from Samsung’s Israeli supplier. “This obliges Variscite to purchase memory from other manufacturers, including Micron, which even today supplies a large portion of the memory components used by the company.”

Variscite specializes in the development and manufacturing of System on Modules (SoMs) intended for integration into its customer’s systems, along with Development Kits and Expansion Boards for these modules. The company’s SoM manufacturing facility is located in Kiryat Gat (south of Israel). It currently accounts for the majority of Telsys Group’s sales. In the first half of 2025, its sales totaled approximately NIS 142 million (compared to NIS 146.7 million in the first half of 2024).

Samsung Woos NVIDIA

Samsung is currently concentrating a major effort on manufacturing large, high-speed memory components (HBM3E) for NVIDIA, and on gaining an advantage in the production of the next-generation components, HBM4. These new memories are intended for use in large data centers running primarily AI applications and AI Large Language Model (LLM). In the coming weeks, it is expected to receive final approval that its HBM3E memories have successfully passed NVIDIA’s qualification tests.

Morgan Stanley’s research department estimates that upon receiving certification, it will begin mass production for NVIDIA as early as November 2025. Telsys clarified that Variscite still has a stock of memory components that should be sufficient to fulfill short-term customer orders. However, if Samsung’s decision does not change, “Variscite may be required to extend delivery times for some of its customers, while simultaneously securing the purchase of memory components from other manufacturers.”

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Posted in: Computers , Electronics Industry , News , Semiconductors

Posted in tags: Memories , Samsung , Variscite

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