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Samsung Net Jumps to 6.62T Won, AI Spurs Chip Comeback

Samsung's net income hits $4.8 billion in Q1, driven by semiconductor rebound and growing AI demand.

By Max Weldon

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4/29, 20:47 EDT
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Key Takeaway

  • Samsung's net income soared to 6.62 trillion won in the March quarter, beating forecasts due to a rebound in its semiconductor business.
  • The chip division's return to profitability is fueled by rising demand for AI-related memory chips, with a 43% increase in semiconductor shipments.
  • Amid global competition, Samsung advances its HBM technology and collaborates with the Biden administration for Texas expansion.

AI Optimism Fuels Samsung's Surge

Samsung Electronics Co. has reported a significant surge in earnings, with net income reaching 6.62 trillion won ($4.8 billion) in the March quarter, surpassing analyst projections of 5.63 trillion won. This marks a substantial increase from the previous year, attributed to the semiconductor business's return to profitability for the first time since 2022. The demand for memory chips, essential for modern electronics and artificial intelligence (AI), is showing signs of recovery after a downturn. Samsung's shares experienced a modest rise in early Seoul trading. The company's efforts to reverse a year-long decline come amid global economic uncertainties that had previously led to a 15-year low in overall operating profit.

Semiconductor Rebound and Market Outlook

Samsung's chip division reported an operating profit of 1.91 trillion won, indicating a positive shift after four consecutive quarters of losses. This rebound is partly driven by the growing demand for chips used in AI development, highlighted by the success of OpenAI's ChatGPT. South Korean trade data has shown a 43% increase in semiconductor shipments, signaling a gradual market recovery. Samsung anticipates strong chip demand to continue, bolstered by the AI sector's expansion. The company is also focusing on high-bandwidth memory (HBM) to compete with rivals like SK Hynix Inc., emphasizing the importance of AI accelerators developed by companies such as Nvidia Corp.

Strategic Moves and Global Competition

Samsung has initiated mass production of its latest HBM product, HBM3E 8H, with plans to continue advancing its HBM chip technology. This strategic move aims to solidify Samsung's position in the AI-driven market, responding to the increasing complexity and data requirements of AI models. However, the global semiconductor landscape is becoming increasingly competitive, with significant investments from various countries in advanced chip manufacturing. Samsung's recent funding agreement with the Biden administration for Texas expansion highlights the strategic importance of maintaining a leading edge in technology. Despite these efforts, concerns remain about Samsung's ability to sustain its market leadership amid challenges from competitors like SK Hynix and Rapidus Corporation.

Management Quotes

  • Kyung Kye-hyun, leads Samsung’s semiconductor business:

    "The division should recover to 2022 levels this year as the longstanding slump begins to end."