Samsung Says AI To Drive Technology Demand In Second Half


Samsung Electronics said on Tuesday it expected demand for artificial intelligence to hold strong in the second half, driving sales of memory chips and tech devices, as it reported a more than 10-fold rise in first-quarter operating profit.

The South Korean company’s memory chip sales nearly doubled in the first quarter from a year earlier as prices rose steeply from a severe downturn, thanks to the boom in AI.

“In the second half of 2024, business conditions are expected to remain positive with demand – mainly around generative AI – holding strong, despite continued volatility relating to macroeconomic trends and geopolitical issues,” Samsung said in a statement.

The world’s biggest maker of memory chips and TVs said operating profit rose to 6.6 trillion won ($4.8 billion) in January-March, up from 640 billion won a year earlier.

That was in line with Samsung’s own estimate of 6.6 trillion won flagged earlier this month, its highest operating profit since the third quarter of 2022.

It cemented a recovery from an unprecedented memory chip downturn caused by weak post-pandemic demand for gadgets that use chips.

The chip division, historically Samsung’s cash cow business that used to make up two-thirds of the company’s operating profit, swung to profit of 1.91 trillion won in the March quarter from a 4.58 trillion won loss a year earlier.

First-quarter revenue rose 13% to 71.9 trillion won, the company said, including a 96% increase in memory chip revenue to 17.49 trillion won, News reported.

Samsung Q1 profit surges tenfold

Earlier, reported Samsung Electronics Co Ltd (KS:005930) clocked a tenfold surge in its first quarter profit, aided chiefly by a recovery in chip demand thanks to the rapidly growing artificial intelligence industry.

The world’s biggest memory chips and smartphone maker said operating profit rose to 6.6 trillion won ($4.8 billion) in the three months to March 31, up from the 640 billion won seen last year. The reading was in line with estimates released by Samsung at the beginning of April.

First-quarter revenue rose to 71.9 trillion won from 63.75 trillion won a year ago, Samsung said in a press release. Stronger sales of its flagship Galaxy S24 smartphone line also factored into the increased revenue, as did a weaker South Korean won.

The bumper results come as increasing AI development sparked a rebound in chip demand in recent quarters. Samsung’s high-bandwidth memory chips are a key component of the processors used in running AI models.

The company recently outlined plans to begin developing the next generation of HBM chips, citing expectations of increased demand from AI. Samsung began mass production of advanced HBM3E chips in April. Its rival SK Hynix Inc (KS:000660) was until April the only maker of HBM3E chips- currently the most advanced memory chips, which are used primarily in AI development.

Still, Samsung’s seemingly exponential growth in profit was also in part driven by a weak base for comparison from 2023, where the chipmaker was still grappling with weak global demand.

The chipmaker said its second quarter will also “remain solid” on demand from AI.