After nearly eighteen months of losses, Samsung Electronics has returned to profitability in its semiconductor division — not through a simple market correction, but through the emergence of a new technological imperative. The global race to build artificial intelligence infrastructure has created urgent, structural demand for specialized memory chips that conventional market cycles could not have predicted. In the first quarter of 2024, that demand translated into a tenfold surge in operating profit, signaling that the semiconductor industry's relationship with boom-and-bust cycles may itself
Samsung's profit surges 10-fold as AI boom revives memory chip demand
Demand for AI chips is reshaping the entire semiconductor cycle
Mark
So Samsung's profit went up tenfold. That's a huge number. What actually changed between last year and now?
Mimi
The memory chip market had been in freefall for years—pandemic disruption, trade tensions, just too many chips chasing too few buyers. Prices collapsed. Samsung's semiconductor division was losing money. But AI changed the equation. Suddenly, data centers and cloud companies need massive amounts of specialized memory chips to run AI systems. Demand outpaced supply for the first time in a long time.
Luke
But wait—is that tenfold jump real growth, or is it a rebound from an artificially depressed baseline? If you're comparing to a quarter where they lost money, the math gets weird.
Mimi
Fair point. The semiconductor division had been unprofitable since late 2022. So yes, this is partly a rebound from a trough. But the revenue growth—nearly 13 percent year-over-year—that's real. And they're now producing chips that didn't exist a year ago.
Mark
What chips are those?
Mimi
High-bandwidth memory, or HBM. It's specialized stuff designed to move data fast enough for AI workloads. Samsung just started mass-producing the 8-layer version this month and plans to make a 12-layer version in the next quarter.
Luke
And they're confident this demand will stick around?
Mimi
They're projecting strong conditions through the end of 2024, driven by AI expansion. But they also acknowledge macroeconomic volatility and geopolitical risks could disrupt things.
Mark
So the question is whether AI demand is durable or a bubble.
Luke
Exactly. And we don't know yet. What we know is that right now, companies building AI infrastructure are buying chips as fast as Samsung can make them.
Mimi
And Samsung is also betting that consumers will want AI features in their phones. The Galaxy S24 has live translation built in. They're planning to add more AI features to cheaper phones too.
Mark
Is that working?
Mimi
The S24 sold well enough to contribute to that 13 percent revenue growth. But whether AI features will actually drive long-term smartphone demand—that's still an open question.
Il Polso
- Samsung's operating profit exploded from 640 billion to 6.6 trillion won year-over-year — a tenfold leap that marks the end of one of the chip industry's worst downturns in recent memory.
- The semiconductor division had bled losses for over a year as pandemic-era gluts, trade tensions, and collapsing prices left manufacturers stranded with excess inventory and no clear floor.
- Artificial intelligence has become the unexpected rescue force — companies racing to build generative AI infrastructure are consuming high-bandwidth memory chips faster than supply chains can comfortably respond.
- Samsung is moving aggressively, launching mass production of its 8-layer HBM3E chips now and planning a 12-layer version for Q2, betting its advanced manufacturing can capture the AI infrastructure wave.
- On the consumer front, Galaxy S24's on-device AI features — including live translation across 13 languages — are driving smartphone upgrades, with Samsung planning to extend these capabilities across its broader mobile lineup.
- Despite macroeconomic volatility and geopolitical headwinds, Samsung is projecting confidence through the second half of 2024, anchored by the belief that generative AI demand will remain the industry's dominant stabilizing force.
After nearly eighteen months of losses, Samsung Electronics has returned to profitability in its semiconductor division — not through a simple market correction, but through the emergence of a new technological imperative. The global race to build artificial intelligence infrastructure has created urgent, structural demand for specialized memory chips that conventional market cycles could not have predicted. In the first quarter of 2024, that demand translated into a tenfold surge in operating profit, signaling that the semiconductor industry's relationship with boom-and-bust cycles may itself be changing.
Samsung Electronics closed the first quarter of 2024 with a dramatic reversal of fortune, posting an operating profit of 6.6 trillion won — roughly €4.4 billion — a tenfold increase from the same period a year earlier. Revenue rose nearly 13 percent to 71.9 trillion won, carried by recovering memory chip prices and strong sales of the Galaxy S24 smartphone.
The semiconductor division's return to profitability for the first time since late 2022 marks the end of a punishing chapter. The memory chip market had been devastated by post-pandemic inventory gluts, cyclical oversupply, and global trade pressures that pushed Samsung's chip business into sustained losses for roughly eighteen months. What finally turned the tide was not a gradual market correction — it was artificial intelligence.
As businesses worldwide pour investment into generative AI infrastructure, demand for high-bandwidth memory chips has surged beyond what conventional supply can easily meet. Samsung responded by beginning mass production of its 8-layer HBM3E chips this month, with a 12-layer version planned for the second quarter. The company expects robust demand for both advanced and conventional server memory to persist through the rest of 2024.
Meanwhile, Samsung is extending its AI ambitions into consumer devices. The Galaxy S24's on-device AI capabilities — including live call translation across 13 languages and 17 dialects — have helped drive smartphone sales, and the company plans to bring similar features to its wider mobile portfolio. Samsung acknowledged macroeconomic uncertainty in its investor communications but expressed confidence that generative AI demand would sustain momentum through the year's second half.
What the results ultimately suggest is a semiconductor industry undergoing a structural transformation. The familiar rhythm of inventory-driven boom and bust is being reshaped by the sustained, infrastructure-scale appetite of artificial intelligence — and Samsung, having survived one of the industry's deepest downturns, is positioning itself to grow alongside it.
Samsung Electronics emerged from a years-long slump in its semiconductor business with stunning force in the first quarter of 2024. The company's operating profit jumped to 6.6 trillion won—roughly €4.4 billion—a tenfold leap from the 640 billion won it had earned in the same quarter a year earlier. Revenue climbed nearly 13 percent to 71.9 trillion won, buoyed by two converging forces: memory chip prices that had finally begun to recover, and brisk sales of the Galaxy S24 smartphone, Samsung's flagship device loaded with new artificial intelligence capabilities.
The semiconductor division, which had been bleeding money through a brutal industry downturn, returned to profitability for the first time since late 2022. That recovery matters because it signals the end of a painful chapter. The memory chip market had been crushed by the aftermath of the pandemic, compounded by global trade tensions and a cyclical glut that left manufacturers with excess inventory and collapsing prices. For nearly eighteen months, Samsung's chip business had operated at a loss. Now, demand was finally outpacing supply again.
The driver of this reversal is artificial intelligence. As companies worldwide race to build out infrastructure for generative AI systems, they need vast quantities of specialized memory chips—particularly high-bandwidth memory, or HBM, which processes data at speeds conventional chips cannot match. Samsung responded by beginning mass production this month of its 8-layer HBM3E chips, with plans to roll out a 12-layer version during the second quarter. The company projects that demand for these advanced chips, along with conventional server memory, will remain robust through the rest of 2024, even as macroeconomic uncertainty and geopolitical tensions create headwinds elsewhere in the global economy.
On the consumer side, Samsung is banking on AI to drive smartphone sales as well. The Galaxy S24 includes features like live translation during calls—available in 13 languages and 17 dialects—that rely on on-device AI processing. The company plans to push these capabilities down into its broader mobile lineup, betting that consumers will see AI as a reason to upgrade. Samsung's statement to investors acknowledged the volatility ahead but expressed confidence that "demand—mainly around generative AI—holding strong" would sustain the company through the second half of the year.
What Samsung's results reveal is a semiconductor industry in the midst of a structural shift. The old cycle of boom and bust, driven by inventory swings and commodity pricing, is being reshaped by a new force: the infrastructure demands of AI. Companies that can produce the right chips at the right time are moving from survival mode back into growth. For Samsung, which had weathered one of the worst downturns in chip industry history, the rebound is not just a financial relief. It is a signal that the worst is behind, and that the next chapter of growth will be written by whoever can scale production of the chips that power artificial intelligence.
Citazioni salienti
In the second half of 2024, business conditions are expected to remain positive with demand—mainly around generative AI—holding strong, despite continued volatility relating to macroeconomic trends and geopolitical issues.— Samsung Electronics statement
Vuoi la storia completa?
Leggi l'originale su BreakingNews.ie ↗
Technology