Samsung Electronics he said on Tuesday that its operating profit rose more than 930% in the first quarter of 2024, driven by growing demand for its servers, memory chips and storage used in artificial intelligence applications.
The company, which struggled in 2023 as the macroeconomic slowdown hit demand for its productssaid memory chip business returned to profitability and prices continued to rise thanks to steady demand for DRAM and NAND chips, high-density SSDs and servers.
Samsung said total revenue rose 12.8 percent to 71.2 trillion KRW ($52.2 billion) in the quarter from a year earlier, while net profit rose 330 percent to 6.75 trillion KRW ($4 .88 billion dollars) compared to the previous year. Operating profit rose to 6.61 trillion KRW ($4.77 billion) in the quarter from 640 billion KRW (about $462 billion) a year earlier.
Samsung’s semiconductor business led most of the improvement, with Sales in the division rose to 23.14 trillion KRW ($16.71 billion) in the first quarter, from 13.73 trillion KRW ($9.92 billion) a year earlier, driven by strong demand for DDR5 chips and storage used for AI servers. The division reported an operating profit of KRW 1.91 trillion ($1.3 billion) in the quarter, compared with an operating loss of KRW 4.58 trillion ($3.3 billion) in the first quarter of 2023 and an operating loss of KRW 2.18 trillion ($1.57 billion). in the fourth quarter of 2023.
Plans for mass production in 2024
Samsung is eager to meet the growing needs of genetic AI computing power and the servers needed to host the mountains of data on which the models are trained. The company last year said it would double production high bandwidth memory (HBM) chips used in AI, 5G, Internet of Things (IoT), graphics applications, virtual reality and augmented reality systems. These chips provide faster data processing and lower power consumption compared to traditional NAND memory chips.
In line with that ambition, Samsung said on Tuesday that it has begun mass-producing high-performance memory chips such as the HBM3E 8H (8-layer) DRAM, as well as V9 NAND chips, is usually used on enterprise servers, artificial intelligence and cloud devices. The company said it also plans to produce HBM3E 12H Brands (12 levels) 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 started The mass production of HBM3E 8-layer semiconductors in February and last month on NVIDIA’s GTC 2024SK Hynix said it had also begun mass production of the HBM3E potato chips.
As for its foundry business, Samsung said development of its 3-nanometer and 2-nanometer AI chips is “progressing smoothly.”
Optimistic prediction
Samsung expects demand to remain strong in the second half of this year, boosted by the growing adoption of genetic artificial intelligence.
“In the second half of 2024, business conditions are expected to remain positive with demand – primarily around genetic artificial intelligence – 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 subsequent expansion of related cloud services will increase the demand not only for HBM, but also for conventional servers and storage solutions. Mobile demand is expected to be flat in 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,” the company said.
Two weeks ago, The The Biden administration agreed to grant Samsung up to $6.4 billion in direct funding under the CHIPS and Science Act to set up semiconductor factories in Texas;
The grant will allow 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 existing facilities near Austin. Micron and TSMC they are also set to receive grants to boost domestic semiconductor production.
