Samsung Electronics saying 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 affected demand for its productssaid its memory chip business returned to profitability and prices continued to rise, thanks to strong demand for DRAM and NAND chips, high-density SSDs and servers.
Samsung said total revenue rose 12.8% to KRW 71.2 trillion ($52.2 billion) in the quarter from a year earlier, while net profit rose 330% to KRW 6.75 trillion ($4 .88 billion) compared to the previous year. Operating profit rose to KRW 6.61 trillion ($4.77 billion) in the quarter from KRW 640 billion (about $462 million) a year earlier.
Samsung’s semiconductor business drove most of the improvement, with The division’s sales rose to 23.14 trillion KRW ($16.71 billion) in the first quarter, up from 13.73 trillion KRW ($9.92 billion) a year earlier, boosted due to 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 to 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.
Mass production plans in 2024
Samsung has been keen to meet the growing computing power needs of generative AI and the servers needed to host the mountains of data on which the models are trained. Last year, the company said it would double its production. high bandwidth memory (HBM) chips used in AI, 5G, Internet of Things (IoT), graphics processing 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 HBM3E 8H (8 layers) DRAM, as well as V9 NAND chips, normally used on 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 expelled its mass production of 8-layer HBM3E semiconductors in February, and last month in Nvidia GTC 2024SK Hynix said it had also started mass producing HBM3E French fries.
As for its foundry business, Samsung said its development of 3-nanometer and 2-nanometer AI chips is “progressing smoothly.”
optimistic forecast
Samsung anticipates demand will remain strong in the second half of this year, driven by the growing adoption of generative AI.
“In the second half of 2024, business conditions They are expected “It will remain positive and demand, primarily around generative AI, will remain strong, despite continued volatility related to macroeconomic trends and geopolitical issues,” the company said in a statement.
“In the case of servers and storage, the continued increase in the supply of AI servers and the subsequent expansion of associated cloud services will increase demand not only for HBM, but also for conventional servers and storage solutions. Mobile device demand is expected to remain stable in the quarter, while PC customers are expected to be affected by slow seasonality, likely causing them to adjust their inventories ahead of new product launches in the second half. of the year,” the company said.
Two weeks ago, he The Biden administration agreed 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 allow the South Korean electronics giant to develop cutting-edge chips by investing in two new logic chip plants, an R&D facility, an advanced packaging facility in Taylor and expanding its existing facilities near Austin. Micron and TSMC They will also receive subsidies to boost national production of semiconductors.
