Samsung profit surges after AI boom reverses chip losses

Samsung profit surges after AI boom reverses chip losses

SEOUL – Samsung Electronics’ earnings surged after the semiconductor business turned profitable for the first time since 2022, reflecting the global AI development boom.

The world’s largest memory chipmaker reported net income of 6.62 trillion won (S$6.55 billion) in the March quarter, versus the average analyst projection for 5.63 trillion won. That’s roughly 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 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.

Longer-term, Samsung is trying to catch smaller rival SK Hynix in the rapidly expanding market for high-bandwidth memory or HBM, which is optimised for use with Nvidia’s AI accelerators. Hynix last week reported its fastest pace of revenue growth since 2010, said overall memory demand is on a steady growth path, citing double-digit price rises in the broader Dram market and the Nand market.

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 longstanding slump begins to end. The company averaged an operating profit of more than 10 trillion won a quarter that year.