Written by Joyce Lee and Heekyung Yang
SEOUL (Reuters) – Samsung Electronics Co., Ltd. has joined rivals as demand for artificial intelligence remains strong and supplies for some high-end chips tighten, leading to a solid recovery in the sluggish global memory chip market. I expect it to benefit.
The company's shares rose 1.8% on Tuesday after the world's largest memory chip maker reported a more than 10-fold increase in first-quarter operating profit and a positive outlook.
But so far this year, Samsung's stock has fallen 0.8%, while SK Hynix's 24 % growth has lagged behind.
“We plan to more than triple the supply of HBM-related chips in 2024 compared to last year,” Jaejoong Kim, vice president of Samsung's memory division, said at an earnings conference.
Samsung announced this month that it has begun mass production of its latest HBM chip for its generative AI chipset, called the 8-layer HBM3E. It is looking to capitalize on the AI boom that has benefited SK Hynix, which was the sole supplier of HBM3 chips to Nvidia.
Samsung said it plans to start manufacturing the 12-layer version during the second quarter and expects its latest HBM3E products to account for two-thirds of its HBM production by the end of the year.
Analysts said the target was offensive.
Jeff Kim, head of research at KB Securities, said Samsung's 8-layer HBM3E is likely to be supplied to Nvidia, while the 12-layer could be supplied to AMD and Nvidia.
“Samsung's technology has an advantage in high stacking, and SK Hynix has an advantage in 8 layers, so a segmentation will occur where Nvidia will get 12 layer products from Samsung and most of its 8 layer products from SK Hynix. “It's possible,” Kim said. .
“Samsung is working hard to improve the yield of 12-layer products.”
Samsung did not immediately respond to a request for comment about HBM's customers.
Samsung also said it will step up its offering of high-end solid-state drive (SSD) products to meet demand for AI servers, and with production capacity concentrated in HBM, supplies of high-end memory chips will be expected towards the end of the year. He said he expected the situation to be tight. Last week's SK Hynix comments.
memory chip profits
South Korean companies' first-quarter revenue rose 13% to 71.9 trillion won ($52.14 billion). This includes a 96% jump in memory chip revenue to 17.49 trillion won, thanks in part to the AI boom, as prices soared from the deep recession.
Operating profit for the January-March period was 6.6 trillion won, an increase from 640 billion won in the same period last year. This was the company's highest operating profit since the third quarter of 2022.
The chip division, which has historically been Samsung's cash cow business and accounted for two-thirds of operating profit, turned a profit of 1.91 trillion won in the March quarter from a loss of 4.58 trillion won in the same period last year. . This was the first surplus since the third quarter of 2022.
According to data provider TrendForce, prices for NAND flash chips used to store data rose 23% to 28% sequentially in the first quarter, while prices for DRAM chips used in high-tech devices rose by about 20%. It is said that it has increased.
Samsung's mobile device business' operating profit for the first quarter was 3.51 trillion won, down from 3.94 trillion won in the same period last year.
Smartphone shipments in the quarter were approximately 60 million units, the same level as the same period last year, but the company regained its position as the world's top smartphone vendor from Apple, which was suffering from declining sales in China.
Profit for the flagship smartphone “Galaxy S24,'' released in the same quarter, decreased due to rising costs such as rising memory chip prices.
Samsung said AI features are boosting sales of its S24 phones, and the division could maintain double-digit profits in the first quarter. According to the company, about 50% of customers purchased S24 phones for the AI features, and 60% said they regularly use the AI features.
(1 dollar = 1,374.1900 won)
(Reporting by Joyce Lee and Heekyung Yang; Editing by Miyoung Kim and Jamie Freed)
