Samsung profit up 10x after AI boom reverses chip losses
Firm says AI functions were driving sales of S24 phones
30 April
Samsung Electronics Co’s earnings surged after the semiconductor business returned to profitability for the first time since 2022, boosted by broad spending on artificial intelligence development.
The world’s largest memory chipmaker reported net income of 6.62 trillion won ($4.8 billion) in the March quarter, versus the average analyst projection for 5.63 trillion won. That’s more than four times the company’s earnings a year earlier.
The results underscore how demand for the memory chips that power modern electronics and artificial intelligence is starting to rebound after a severe downturn.
Samsung, also the world’s largest smartphone maker, is trying to reverse a year-long decline triggered by global economic uncertainty. In 2023, the company’s overall operating profit plunged to a 15-year low after its semiconductor unit posted a loss of 14.9 trillion won.
Signs are pointing to a gradual market rebound, driven in part by demand for chips used to develop AI after the advent of Openai’s CHATGPT. Samsung’s chip division posted a a better-than-projected 1.91 trillion won operating profit, its first quarter in the black 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.
Longer-term, Samsung is trying to catch smaller rival SK Hynix Inc in the rapidly expanding market for high-bandwidth memory or HBM, which is optimised for use with Nvidia Corp.
Samsung’s mobile devices business booked a 3.51 trillion won operating profit in the first quarter, down from 3.94 trillion won a year earlier.
It shipped about 60 million smartphones during the quarter, in line with a year earlier but retaking its title as the world's top smartphone vendor from Apple, which is suffering a sales decline in China. Rising costs, including increased memory chip prices, dented margins from its flagship Galaxy S24 smartphones launched during the quarter.
Samsung said AI functions were driving sales of S24 phones, allowing the division to maintain double-digit profitability in the first quarter. About 50 per cent of customers said they bought S24 phones for the AI functions, and 60 per cent were regularly using the AI functions, the company said.