Samsung’s operating profit soars 930% as AI tailwinds drive demand for memory chips

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Samsung Electronics said connected Tuesday that its operating profit surged much than 930% successful nan first 4th of 2024, driven by soaring request for its servers, representation chips and retention utilized successful AI applications.

The company, which struggled successful 2023 arsenic nan macroeconomic slowdown wounded request for its products, said its representation spot business returned to profitability, and prices continued to emergence acknowledgment to coagulated request for DRAM and NAND chips, high-density SSDs and servers. 

Samsung said full gross roseate 12.8% to KRW 71.2 trillion ($52.2 billion) successful nan 4th from a twelvemonth earlier, while nett profit roseate 330% to KRW 6.75 trillion ($4.88 billion) compared to a twelvemonth earlier. 

Samsung’s semiconductor business drove nan bulk of nan improvement, with income successful nan section rising to KRW 23.14 trillion ($16.71 billion) successful nan first quarter, up from KRW 13.73 trillion ($9.92 billion) a twelvemonth earlier, driven by beardown request for DDR5 chips and retention utilized for AI servers. The section reported an operating profit of KRW 1.91 trillion ($1.3 billion) successful nan quarter, compared to an operating nonaccomplishment of KRW 4.58 trillion ($3.3 billion) successful nan first 4th of 2023, and an operating nonaccomplishment of KRW 2.18 trillion ($1.57 billion) successful nan 4th fourth of 2023. 

Mass accumulation plans successful 2024

Samsung has been keen connected catering to nan expanding compute powerfulness needs of generative AI and nan servers needed to big nan mountains of information that models are trained on. The institution past twelvemonth said it would double down connected producing high-bandwidth memory (HBM) chips that are utilized successful AI, 5G, nan Internet of Things (IoT), schematic processing applications, virtual reality and augmented reality systems. These chips supply faster information processing and little powerfulness depletion compared to nan accepted NAND representation chips.

In statement pinch that ambition, Samsung connected Tuesday said it has begun mass-producing high-performance representation chips, for illustration HBM3E 8H (8-layer) DRAM, as good arsenic V9 NAND chips, typically used in endeavor servers, AI and unreality devices. The institution said it besides intends to nutrient HBM3E 12H (12-layer) chips successful nan 2nd 4th of this year. 

Samsung is nan world’s largest representation spot shaper and competes pinch Micron and SK Hynix, a Korean representation spot maker, successful nan marketplace for HBM chips. Micron kicked off its wide accumulation of 8-layer HBM3E semiconductors successful February, and past period astatine NVIDIA’s GTC 2024, SK Hynix said it had besides started wide producing HBM3E chips

As for its foundry business, Samsung said its improvement of 3-nanometer and 2-nanometer AI chips is “progressing smoothly.” 

Optimistic forecast

Samsung anticipates request will stay successful nan 2nd half of this year, buoyed by expanding take of generative AI. 

“In nan 2nd half of 2024, business conditions are expected to stay affirmative pinch request — chiefly astir generative AI — holding strong, contempt continued volatility relating to macroeconomic trends and geopolitical issues,” nan institution said successful a statement. 

“For servers and storage, nan continuous summation successful nan proviso of AI servers and consequent description of associated unreality services will summation request not only for HBM, but besides for accepted servers and retention solutions. Demand for mobile is expected to beryllium unchangeable successful nan quarter, while PC customers are predicted to beryllium affected by slow seasonality, making them apt to set their inventories up of caller merchandise launches successful nan 2nd half of nan year,” nan institution said.

Two weeks ago, the Biden management agreed to grant Samsung up to $6.4 cardinal successful nonstop backing nether nan CHIPS and Science Act to group up semiconductor factories successful Texas. 

The assistance will alteration nan South Korean physics elephantine to create leading-edge chips by investing successful 2 caller logic spot plants, an R&D facility, an precocious packaging installation successful Taylor, and its existing installation description adjacent Austin. Micron and TSMC also are group to person grants to bolster home semiconductor production.