Samsung reports a 10-fold increase in profit as AI drives rebound in memory chip markets

SEOUL, SOUTH KOREA: Samsung Electronics on Tuesday reported a 10-fold increase in operating profit for the last quarter, driven by the expansion of artificial intelligence (AI) technologies, which has led to a rebound in the markets for computer memory chips.

The South Korean semiconductor and smartphone giant stated that its operating profit for the January-March quarter amounted to 6.6 trillion won ($4.8 billion), up from the 640 billion won ($465 million) it earned during the same period last year.

Revenue increased by nearly 13% to 71.9 trillion won ($52 billion), fuelled by higher prices for memory chips and strong sales of its flagship Galaxy S24 smartphones, the company said.

The company earned 1.91 trillion won ($1.38 billion) in operating profit from its semiconductor business, marking the division's first quarterly profit since the fourth quarter of 2022, as the chip market continues to recover from a cyclical slump exacerbated by the COVID-19 pandemic and global trade tensions.

Samsung projected that the memory chip market would remain strong in the coming months, driven by the expansion of generative AI technologies, which is increasing the demand for both conventional chips used in servers and advanced chips designed to process AI, including high-bandwidth memory, or HBM.

In response to higher demands for AI chips, Samsung announced that it began mass production of its latest HBM chips, called 8-layer HBM3E, this month, and that it plans to start producing the 12-layer version of the chips during the second quarter.

"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.

For smartphones, the company will continue to focus on boosting the sales of its flagship device, the Galaxy S24, which is equipped with an array of new features enabled by AI, including live translation during phone calls in 13 languages and 17 dialects.

Samsung stated that it plans to expand AI features beyond the S24 to other mobile devices, as it expects these technologies to drive growth in the smartphone market in the coming months amid improvements in global consumer spending.

By RSS/AP