Here’s another thing AI can do: Return Samsung’s memory biz to profit

HBM will help too. Foundry biz? On track for 2nm but bruised

Samsung Electronics' Device Solutions unit reported on Tuesday a 68 percent year-on-year increase in sales for Q1 2024, largely thanks to its memory sales – a result that confirms what many had predicted: an AI and server boom has brought the chip shop out of the lows experienced in 2023.

The increase in sales translate to Device Solutions (DS) revenue of ₩23.14 trillion ($16.77 billion). A 96 percent year-on-year increase in memory sales accounted for ₩17.49 trillion ($12.68 billion) of that total.

Operating profit for the DS unit rose 6.5 percent to ₩1.91 trillion ($1.39 billion).

Overall, Samsung Electronics net income stood at ₩6.62 trillion ($4.8 billion) – more than four times the ₩1.4 trillion ($1.02 billion) reported for the same quarter in 2023.

"Looking ahead to the second quarter, the industry is expected to remain solid, led mainly by demand for generative AI," explained Samsung.

"For servers and storage, the continuous increase in the supply of AI servers and subsequent expansion of associated cloud services will increase demand not only for high bandwidth-memory (HBM) but also for conventional servers and storage solutions," continued the chaebol.

In its last earnings report, Samsung had pinned its hopes on an AI boom to bring it back to profitability. At the time, overall operating profit was at its lowest since 2008, revenue was on the decline, and the outlook was not looking too cheery.

The Korean memory maker said then it planned to introduce the industry's highest capacity 32GB DDR5 based on its 1B fabrication process while ramping up next-generation HBM3E.

Samsung revealed on Tuesday it had started mass production of HBM3E 8H this month and plans to mass produce HBM3E 12H products and a 128GB product based on 1B nanometer 32GB DDR5 within the second quarter.

The electronics giant plans to increase HBM supply – memory designed for use with AI accelerators – to meet growing demand for generative AI, and to "accelerate 1B nanometer-based 32GB DDR5 supply with faster ramp-up speeds."

V9 NAND mass production is also now underway.

"For NAND, the company plans to enhance technology leadership by mass producing quad-level cell (QLC) for V9 in the third quarter," boasted Samsung.

Samsung is not the only Korean memory-maker moving full speed toward HBM. The AI infrastructure led SK hynix into its second highest operating profit ever, and an all-time high for Q1 revenues, per its quarterly reports. SK hynix has even ditched some of its NAND production plans to focus on HBM.

But because every silver lining has a cloud, Samsung also reported its foundry business "saw a delay in sales improvement due to weak market demand and continued inventory adjustments."

Yet, development of advanced 3nm and 2nm technology, along with stabilized 4nm technology yields, helped it achieve its highest ever order backlog in the first quarter.

"The Foundry Business plans to complete the development of 2nm design infrastructure and prepare 4nm technology applicable to 3D IC," predicted the chaebol. ®

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