AI To Drive Demand in Second Quarter, Says Samsung

Samsung Electronics anticipates strong demand for artificial intelligence (AI) technology to continue driving sales of memory chips and tech devices in the second half of the year. The company reported a significant increase in first-quarter operating profit, largely attributed to a nearly doubling of memory chip sales from a year earlier, with prices rising steeply due to increased demand for AI-related applications.

The company highlighted that business conditions are expected to remain positive in the latter half of 2024, with demand, particularly for generative AI, remaining robust despite potential volatility stemming from macroeconomic trends and geopolitical issues.

Samsung's first-quarter operating profit surged to 6.6 trillion won ($4.8 billion), up from 640 billion won in the same period last year, in line with its earlier estimate. This marked its highest operating profit since the third quarter of 2022. Revenue for the quarter increased by 13 percent to 71.9 trillion won, driven by a 96 percent surge in memory chip revenue to 17.49 trillion won.

The memory chip division, historically a significant contributor to Samsung's operating profit, returned to profitability after a period of downturn, buoyed by customers purchasing chips in anticipation of further price increases. Prices of NAND flash chips rose by 23-28 percent, while prices of DRAM chips increased by approximately 20 percent during the first quarter.

Looking ahead, Samsung announced the commencement of mass production of its latest high bandwidth memory (HBM) chips, called 8-layer HBM3E, for use in generative AI chipsets. This move underscores Samsung's efforts to capitalize on the ongoing AI boom, despite facing competition from rivals benefitting from similar market trends.

Overall, Samsung's optimistic outlook reflects the company's confidence in the sustained demand for AI-driven technologies and its commitment to leveraging advancements in memory chip technology to meet evolving market needs.