Samsungs Profits Soar Due to AI Boom
Samsung Electronics is expecting a surge in demand for artificial intelligence (AI) and facing a shortage of high-end chips in the market. The tech giant’s shares rose by 1.8% following a remarkable over 10-fold increase in first-quarter operating profit.
The company announced its plans to ramp up the supply of HBM-related chips by more than three times in 2024. Samsung has already commenced mass production of 8-layer HBM3E chips for generative AI chipsets, with production of the 12-layer version set to begin in the second quarter. Samsung is expected to have two-thirds of its output dedicated to HBM3E products by the end of the year.
Analysts believe that Samsung’s ambitious targets are particularly aimed at meeting the chip demand from companies like Nvidia and potentially AMD. The company foresees a tightening supply of high-end memory chips towards the end of the year, mainly due to its focus on HBM technology.
In the first quarter, Samsung witnessed a 13% increase in revenue, reaching 71.9 trillion won, with memory chip revenue skyrocketing by 96%. Operating profit also soared to 6.6 trillion won, marking the highest since the third quarter of 2022. The chip division managed to return to profitability after a loss in the previous year, with increased prices of NAND flash chips and DRAM chips contributing to the company’s profit growth.
Samsung’s mobile devices business also flourished in the first quarter, reporting a 3.51 trillion won operating profit. The company shipped approximately 60 million smartphones during the quarter, reclaiming the title of the world’s leading smartphone vendor from Apple.
Despite the success in smartphone sales, increased memory chip prices impacted the margins of Samsung’s flagship Galaxy S24 smartphones launched in the quarter. However, the AI features integrated into the S24 phones reportedly boosted sales and maintained double-digit profitability in the first quarter.
