Samsung Electronics forecast demand for artificial intelligence would hold strong and tighten supply of some high-end chips, joining rivals in benefiting from a solid rebound in the battered global memory chip market.
The upbeat outlook from the world’s largest memory chip maker sent its shares 1.8% higher on Tuesday after it reported a more than 10-fold rise in first-quarter operating profit.
But so far this year Samsung shares are down 0.8%, lagging SK Hynix’s 24% gain, as it seeks to catch up with its smaller rival in the supply of top-end chips such as high bandwidth memory (HBM) to AI leader Nvidia (NVDA).
“We plan to increase supply of HBM-related chips in 2024 by more than three-fold versus last year,” Jaejune Kim, a Samsung vice president in charge of the memory division, said on an earnings call.
Samsung said it began mass production this month of the latest HBM chips for use in generative AI chipsets, called 8-layer HBM3E. It is seeking to capitalize on the AI boom that has benefited SK Hynix, which had been the sole supplier of HBM3 chips to Nvidia.
Samsung said it planned to start making the 12-layer version during the second quarter, and expected the latest HBM3E products to account for two-thirds of its HBM output by year-end.
The South Korean company’s first-quarter revenue rose 13% to 71.9 trillion won ($52.14 billion), including a 96% increase in memory chip revenue to 17.49 trillion won as prices rose steeply from a severe downturn, partly thanks to the boom in AI.
Operating profit rose to 6.6 trillion won in January to March, up from 640 billion won a year earlier. It was the company’s highest operating profit since the third quarter of 2022.
The chip division, historically Samsung’s cash cow business that used to account for two-thirds of its operating profit, swung to a profit of 1.91 trillion won in the March quarter from a 4.58 trillion won loss a year earlier. It was the first profit since the third quarter of 2022.
