Samsung Electronics semiconductor factory in Pyeongtaek, Gyeonggi-do / Provided by Samsung Electronics
The tech giant's first-quarter profit soared to $4.78 billion.Meet higher chip demand
Written by Baek Byung-yeol
Samsung Electronics plans to more than triple its supply of high-bandwidth memory (HBM) semiconductors (simply known as AI memory chips) this year compared to 2023 to meet the surge in demand for generative AI services. The company announced Tuesday.
For this reason, Samsung will start producing the 5th generation HBM chip “HBM3E'', which is a stack of eight DRAM memory chips, starting this month, and plans to mass produce the 12-layer HBM3E within the second quarter.
The announcement came as the company posted an operating profit of 6.61 trillion won ($4.78 billion) in the first quarter, an increase of 931.87% compared to the same period in 2023, led by its semiconductor and smartphone businesses. . Samsung's sales reached 71.92 trillion won, an increase of 12.82% from the same period last year.
Kim Jaejoong, Samsung's executive vice president of memory business, told investors, “This year's HBM supply will continue to increase by more than three times compared to last year, and we have already discussed and agreed on this amount with our customers. “There is,” he told investors. First quarter financial results announcement. “Next year we plan to have at least twice as much supply as this year.”
The technology giant attributed the increase in sales and operating profit to higher prices for memory chips and strong sales of its flagship Galaxy S24 series of smartphones.
Specifically, Samsung's device solutions division, which handles the memory chip business, achieved an operating profit of 1.91 trillion won, making it profitable for the first time in five quarters. The chip division suffered operating losses in all four quarters of 2023 after recording an operating profit of 270 billion won in the fourth quarter of 2022.
The operating profit of the Device Experience (DX) division, which handles smartphones and home appliances, was 4.7 trillion won. Samsung emphasized that the Galaxy AI feature installed in the Galaxy S24 series was well received by customers.
Samsung's home appliance business enjoyed strong demand as it focused on selling high-end products such as 75-inch and larger TVs, high-end air conditioners, and bespoke AI home appliances.
On the other hand, Samsung Display's operating profit decreased 56.4% from the same period last year to 340 billion won due to intensified sales competition.
Samsung said it expects strong business conditions to continue in the second quarter.
Sales of memory chips for servers and storage are expected to increase due to continued demand from generative AI, but chip prices are expected to rise.
“Recently, we have seen a surge in requests for SSD supplies as generative AI models continue to evolve,” Kim said. “This year's server SSD shipments are expected to increase by 80% compared to last year.”
The smartphone division aims to enhance the AI user experience of its next foldable device, which is expected to launch in the second half of this year. Furthermore, in the wearable device category, Samsung confirmed that it is preparing to launch the smart gadget “Galaxy Ring” around the same time.
Samsung has announced that its foundry business, which manufactures chips for chip design companies, plans to start mass production in 2026 at its Taylor factory in Texas, USA, which is currently under construction.
