Samantha (Samsung’ Electronics) Predicts Strong Demand for AI Chips, Boosting Supply and Tightening Market

Samantha (Samsung’ Electronics) has forecast a strong demand for artificial intelligence to continue tightening supply in some high-end chip segments, joining rivals benefiting from a rebounding global memory chip market. Samsung shares rose by 1.8% following its Q1 earnings report showing a more than tenfold increase in operating profit compared with the same period last year. However, this year Samsung’s stock is down by 0.8%, while SK Hynix has risen by 24%. The South Korean company aims to boost supply of high bandwidth memory (HBM) chips for AI leader Nvidia by more than three times in Q2 versus the previous year, as it catches up with its smaller rival’s production capabilities. Samsung said that mass production had started this month on new HBM3E products designed specifically for generative AI chipsets and expects these to account for two-thirds of total output by year end. Analyst Jeff Kim from KB Securities believes the targets are ambitious, as demand seems split between Nvidia and Samsung’s rival SK Hynix; with AMD potentially taking 12-layer products supplied by Samsung during Q2.
Samsung also plans to increase offerings of high-end solid state drive (SSD) items for AI servers, stating that overall memory chip supply is likely to become tighter towards the end of this year due to capacity being focused on HBM production – a similar sentiment expressed last week by SK Hynix. Samsung’s Q1 revenue rose 13% YoY to KRW71.9tn ($52bn), including a significant rise in memory chip revenues from the previous quarter, while operating profit was up at KRW6.6tn versus KRW640bn last year – its highest since Q3 ’22. The company’s historical cash cow division returned to an annual operating profit for this past Quarter; generating income of KRW1.91tn after suffering a loss in the same period during 2022 as market prices started increasing rapidly amid supply disruption problems stemming from falling inventory levels earlier that year caused by steep demand decline within datacenter buildout markets linked to economic uncertainty concerns around global inflation and interest rate hikes – leading some analysts to suggest that this current upswing may not be sustainable in the long term. Samsung’s mobile devices division posted an operating profit of KRW3.51tn for Q1, down slightly YoY at KRW3.94tn due to rising costs such as increased memory chip prices hurting flagship Galaxy S24 margins (about 50% consumers who purchased these units bought them mainly for the AI capabilities and around 60% of users are regularly using said features). Samsung stated that growing demand in this area helped maintain double-digit profitability levels throughout Q1.