Samsung electronics said announced on Tuesday that its operating profit rose more than 930% in the first quarter of 2024, driven by increasing demand for its servers, memory chips and storage for AI applications.
The company that struggled in 2023 as the macroeconomic slowdown hurt demand for its productssaid its memory chip business has returned to profitability and prices have continued to rise thanks to solid demand for DRAM and NAND chips, high-density SSDs and servers.
Samsung said total revenue in the quarter rose 12.8% year-on-year to KRW 71.2 trillion (US$52.2 billion), while net profit rose 330% year-on-year to KRW 6.75 trillion (4 .88 billion US dollars) rose.
Most of the improvement came from Samsung’s semiconductor business The division’s revenue rose to KRW 23.14 trillion (US$16.71 billion) in the first quarter from KRW 13.73 trillion (US$9.92 billion) a year ago, reflecting strong demand for DDR5 chips and memory for AI servers. The department reported an operating profit of 1.91 trillion KRW (US$1.3 billion) in the quarter, compared to an operating loss of 4.58 trillion KRW (US$3.3 billion) in the first quarter of 2023 and an operating loss of KRW 2.18 trillion (US$1.57 billion). in the fourth quarter of 2023.
Mass production plans in 2024
Samsung has been eager to meet the increasing computing power needs of generative AI and the servers needed to host the mountains of data on which the models are trained. The company announced last year that it would double production of high-bandwidth memory (HBM) chips used in AI, 5G, the Internet of Things (IoT), graphics processing applications, and virtual reality and augmented reality. systems can be used. These chips offer faster data processing and lower power consumption compared to traditional NAND memory chips.
In line with this goal, Samsung announced on Tuesday that it has begun mass production of high-performance memory chips such as the HBM3E 8H (8-layer) DRAM. as well as V9 NAND chips, typically used in enterprise servers, AI and cloud devices. The company said it also wants to produce HBM3E 12H (12-layer) chips 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 away its mass production of 8-layer HBM3E semiconductors in February and last month NVIDIA’s Terms and Conditions 2024SK Hynix said it has also started mass production of HBM3E crisps.
Regarding its foundry business, Samsung said the development of 3-nanometer and 2-nanometer AI chips is “progressing smoothly.”
Optimistic forecast
Samsung expects demand to continue in the second half of this year, supported by increasing adoption of generative AI.
“Business conditions will improve in the second half of 2024 are expected “We want to remain positive as demand – particularly in the generative AI space – remains strong despite continued volatility related to macroeconomic trends and geopolitical issues,” the company said in a statement.
“In servers and storage, the continued increase in the supply of AI servers and the associated expansion of associated cloud services will increase demand not only for HBM, but also for traditional 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, so they are 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 agreed To provide Samsung with up to $6.4 billion in direct funds under the CHIPS and Science Act to build 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, a research and development facility, a modern packaging facility in Taylor and the expansion of its existing facility near Austin. Micron and TSMC In addition, subsidies are to be received to strengthen domestic semiconductor production.