Samsung Electronics is anticipating a robust demand surge for artificial intelligence (AI), which is poised to tighten the supply of high-end chips, contributing to a solid rebound in the global memory chip market. This optimistic outlook from the world’s leading memory chip maker has driven its shares up by 1.8% following a remarkable more than 10-fold increase in first-quarter operating profit.
Despite experiencing a slight decline in its shares this year, Samsung is actively working to bolster its position in supplying top-tier chips, particularly high bandwidth memory (HBM) crucial for AI leader Nvidia. The company plans to significantly ramp up HBM chip production in 2024, with a focus on the latest 8-layer HBM3E chips, while also gearing up for the production of 12-layer versions.
Analysts are acknowledging Samsung’s ambitious targets, noting the potential for its advanced chip technology to meet diverse AI needs, possibly serving both Nvidia and AMD. Samsung is also intensifying efforts to increase offerings of high-end solid-state drive (SSD) products to meet the surging demand for AI servers.
As Samsung aims to strengthen its foothold in the high-end memory chip market, it foresees tight supply conditions toward the year-end due to the concentration of capacity on HBM production, echoing similar sentiments from SK Hynix.
In the first quarter, Samsung witnessed a significant revenue increase, driven by a substantial rise in memory chip sales amidst the AI boom. Operating profit surged to its highest level since 2022, marking a significant turnaround for Samsung’s chip division, which had previously suffered losses.
Despite facing challenges such as rising costs impacting margins, particularly with the launch of its flagship Galaxy S24 smartphones, Samsung remains bullish about the role of AI features in driving sales. The company reported that a significant portion of customers were attracted to the S24 phones for their AI capabilities, signaling a positive outlook for Samsung in the AI-driven market.
As Samsung continues to navigate the dynamic landscape of the semiconductor industry, its strategic focus on AI-driven technologies positions it favorably to capitalize on the burgeoning demand for high-performance chips in various sectors.
