Samsung reports chip profits after a year of losses, as AI boom drives fourfold surge in overall income

Samsung’s chip division posted a better-than-projected 1.91 trillion won operating profit, its first profitable quarter after four successive losses. South Korean trade data released this month showed semiconductor shipments led growth in the country’s exports in the first 20 days of April, rising 43 per cent from a year earlier.

In its earnings release, Samsung said it expects chip demand to remain strong in the current quarter and the second half of this year. It said that the industry should remain strong, in large part because of the demand for generative AI.

Microsoft and Alphabet, Google’s parent company, reported financial results last week that beat analysts estimates, in part because of AI services.

“Samsung is lagging behind in AI semiconductors, and also they’re struggling with the utilisation rates” in their foundry business, Daiwa Securities analyst SK Kim said. “However, I think that now, especially this quarter, we’ll see the progress of the HBM3E.”

Samsung’s smartphone and network business – the biggest contributor to its overall business – posted an operating profit of 3.5 trillion won on sales of 33.5 trillion won during the quarter, aided by strong sales of the Galaxy S24 series.

Still, Samsung expects overall demand for smartphones to decline sequentially due to seasonality, the company said.

China’s chip output surges amid growing dominance in legacy chips

Samsung said it began mass production of its latest HBM product, HBM3E 8H, and plans to mass produce future HBM chips in the second quarter.

Kyung Kye-hyun, who leads Samsung’s semiconductor business, said at the company’s annual shareholders’ meeting in March that the division should recover to 2022 levels this year as the long-standing slump begins to end. The company averaged an operating profit of more than 10 trillion won a quarter that year.