Joyce Lee and Heekyung Yang
SEOUL (Reuters) – Samsung Electronics said on Tuesday it expects demand for artificial intelligence to continue in the second half, boosting sales of memory chips and tech devices, as it reported more than 10-fold jump in operating profit in the first quarter .
The South Korean company’s memory chip sales nearly doubled in the first quarter from a year earlier as prices rose sharply after a major slump caused by the artificial intelligence boom.
“Business conditions are expected to remain positive in the second half of 2024 and demand – mainly for generative artificial intelligence – is expected to remain strong despite ongoing volatility related to macroeconomic trends and geopolitical issues,” Samsung (KS:) said in a statement. .
Samsung shares rose 1.6% in morning trading, outpacing a 0.5% rise in South Korea’s benchmark index.
The world’s largest maker of memory chips and televisions said operating profit rose to 6.6 trillion won ($4.8 billion) in the January-March period, up from 640 billion won a year earlier.
This matches Samsung’s own estimate of 6.6 trillion won noted earlier this month, its highest operating profit since the third quarter of 2022.
First-quarter revenue rose 13% to 71.9 trillion won, the company said, including a 96% jump in memory chip revenue to 17.49 trillion won.
That cemented a recovery from an unprecedented slump in the memory chip business, driven by weak post-pandemic demand for gadgets using chips.
MEMORY CHIP PROFIT
The chip division, historically the cash cow of Samsung’s business and previously responsible for two-thirds of the company’s operating profit, posted a profit of 1.91 trillion won in the March quarter from a loss of 4.58 trillion won a year earlier.
remove advertising
.
Samsung’s memory chip unit reported a profit for the first time since the third quarter of 2022 as customers bought chips in anticipation of further price increases.
According to data provider TrendForce, prices for NAND flash memory chips used for data storage rose 23% to 28% in the first quarter compared with the previous quarter, while prices for DRAM chips used in tech devices rose by about by 20%.
South Korean rival SK Hynix last week said it expects the memory chip market to fully recover due to demand for AI as the company reported its highest profit in nearly two years.
Samsung said it this month began mass production of its latest high-bandwidth memory (HBM) chips for use in generative AI chipsets, called 8-layer HBM3E, as it seeks to capitalize on the AI boom that has benefited its competitors.
The company said it plans to begin production of the 12-layer version in the second quarter.
Samsung’s mobile device division recorded operating profit of 3.51 trillion won in the first quarter, up from 3.94 trillion won a year earlier. Rising costs, including higher prices for memory chips, depressed profits from the flagship Galaxy S24 smartphones launched this quarter.
($1 = 1,374.1900 won)