Samsung Electronics said On Tuesday, its operating profit jumped more than 930% in the first quarter of 2024, driven by growing demand for its servers, memory chips and storage used in AI applications.
The company, which struggled in 2023 as the macroeconomic slowdown hurt demand for its productssaid its memory chip business returned to profitability and prices continued to rise on solid demand for DRAM and NAND chips, high-density SSDs and servers.
Samsung said its total revenue rose 12.8 percent to KRW71.2 trillion ($52.2 billion) in the quarter from a year earlier, while net profit increased. increased by 330% to KRW 6.75 trillion ($4.88 billion) from the previous year. Operating profit increased to KRW 6.61 trillion ($4.77 billion) in the quarter from KRW 640 billion (about $462 billion) a year earlier.
Samsung’s semiconductor business is driving most of this improvement, with divisional sales reached KRW 23.14 trillion ($16.71 billion) in the first quarter, up from KRW 13.73 trillion ($9.92 billion) a year earlier, driven by strong chip demand DDR5 and storage used for AI servers. The division reported an operating profit of KRW1.91 trillion ($1.3 billion) in the quarter, compared to an operating loss of KRW4.58 trillion ($3.3 billion) in the first quarter of 2023 and an operating loss of 2.18 trillion KRW ($1.57 billion). in the fourth quarter of 2023.
Mass production plans in 2024
Samsung has focused on meeting the growing needs for generative AI computing power and the servers needed to host the mountains of data on which the models are trained. Last year, the company announced that it would increase efforts to produce high-bandwidth memory (HBM) chips used in AI, 5G, Internet of Things (IoT), graphics processing, virtual reality and augmented reality systems. These chips enable faster data processing and lower power consumption compared to traditional NAND memory chips.
In line with this ambition, Samsung announced on Tuesday that it has started mass production of high-performance memory chips, such as HBM3E 8H (8 layers) DRAM, as well as V9 NAND chips, generally used in enterprise servers, AI and cloud devices. The company said it also intends to produce HBM3E 12H (12 layers) in the second quarter of this year.
Samsung is the world’s largest memory chip maker and competes with Micron and SK Hynix, a Korean memory chip maker, in the HBM chip market. Micron kicked off its mass production of 8-layer HBM3E semiconductors in February and last month in NVIDIA’s 2024 GTCsSaskatchewan Hynix said it has also started mass production of HBM3E fleas.
Regarding its foundry business, Samsung said its development of 3- and 2-nanometer AI chips is “progressing smoothly.”
Optimistic forecasts
Samsung expects demand to remain strong in the second half of this year, supported by the growing adoption of generative AI.
“In the second half of 2024, economic conditions are waiting remain positive, with demand – primarily around generative AI – remaining strong, despite continued volatility related to macroeconomic trends and geopolitical issues,” the company said in a statement.
“For servers and storage, the continued increase in the supply of AI servers and the further expansion of associated cloud services will increase demand not only for HBM, but also for conventional servers and storage solutions. Demand for mobile is expected to be stable during the quarter, while PC customers are expected to be affected by slow seasonality, making them likely to adjust their inventories ahead of new product launches in the second half of the year,” the company said.
Two weeks ago, THE The Biden administration agrees to provide Samsung with up to $6.4 billion in direct funding under the CHIPS and Science Act to establish semiconductor factories in Texas.
The grant will enable the South Korean electronics giant to develop cutting-edge chips by investing in two new logic chip factories, an R&D facility, an advanced packaging facility in Taylor and the expansion of its existing facilities near Austin. Microns and TSMC should also receive subsidies to strengthen domestic semiconductor production.
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