Samsung's Profits Soar on AI Chip Demand and Higher Prices

Samsung and AMD earnings got a boost from the AI boom

South Korean electronics giant Samsung beat Wall Street's expectations in its second-quarter earnings, partly driven by strong demand for its memory chips, which are needed for artificial intelligence chips. Samsung reported revenue of almost 74.1 trillion won, or about $54 billion, for the second quarter of 2024 -- a 23.42% increase from the previous year. The company reported operating profit of 10.44 trillion won, or $7.6 billion -- a whopping 1,458.2% year-over-year jump. Strong demand for the company's high-bandwidth memory (HBM) chips and other memory chips drove results, Samsung said. Investments in AI by cloud service providers as well as growing business demand for AI servers are increasing demand for the company's chips. Samsung said it expects strong demand for AI servers in the second half of the year as these investments continue. Amid high demand for AI chips, Samsung said it would expand capacity to increase sales of its fifth-generation HBM3E memory chips. Chipmaker Nvidia has reportedly approved Samsung's fourth-generation HBM3 memory chip for use in its H20 AI chips specifically designed for the Chinese market. The H20 graphics processing unit, or GPU, is one of three chips Nvidia designed to not require an export control license. However, the HBM3E memory chips have reportedly not met Nvidia's standards, and the company is continuing to test them. Meanwhile, U.S.-based Advanced Micro Devices (AMD) also beat Wall Street's expectations in its earnings results, reporting revenue of $5.8 billion for the second quarter of 2024. The "strong revenue and earnings growth" was "driven by record Data Center segment revenue," AMD chair and chief executive Lisa Su said. Data center revenue was $2.8 billion for the quarter -- up 115% from the previous year. AMD's new AI chips are set to rival those from Nvidia. "Our AI business continued accelerating and we are well positioned to deliver strong revenue growth in the second half of the year led by demand for Instinct, EPYC and Ryzen processors," Su said. Samsung's stock is up 5.4% so far this year, while AMD's stock is up 2.8%.

Samsung bullish on AI demand as profit soars on higher chip prices

Rebounding semiconductor prices stoked by the AI boom lifted June quarter earnings for the world's biggest maker of memory chips, smartphones and TVs from a low base a year ago. "In the second half of 2024, AI servers are expected to take up a larger portion of the (memory) market as major cloud service providers and enterprises expand their AI investments," Samsung said. Samsung's share price rose 0.7% in morning trade versus a 0.3% rise in the benchmark index. Operating profit rose to 10.4 trillion won ($7.52 billion) in April-June, up from 670 billion won a year earlier, Samsung said. It was Samsung's highest operating profit since the third quarter of 2022, spurred by the chip division returning to form as the tech giant's cash cow after a slump caused by weak post-pandemic demand for gadgets that use the chips. The chip division reported a 6.45 trillion won profit, its highest since the second quarter of 2022, and its second consecutive quarterly profit. Explosive demand for high-end DRAM chips such as high bandwidth memory (HBM) chips used in AI chipsets, as well as chips used in data centre servers and gadgets that run AI services have helped to lift chip prices. Samsung said its second-quarter HBM revenue rose about 50% from the previous quarter. South Korean rival and HBM leader SK Hynix also said last week demand for AI chips will continue to get stronger, as it posted its highest quarterly profit since 2018. Samsung has yet to meet AI chip leader Nvidia's standards for fifth-generation HBM chips called HBM3E, though Samsung's fourth-generation HBM - dubbed HBM3 - has been cleared by Nvidia for use in its less-sophisticated graphics processor, called the H20, developed for the Chinese market, sources have told Reuters. However, Samsung forecasted HBM3E chips would take up 60% of its HBM sales by the fourth-quarter. Analysts said the aggressive target could be achieved if Samsung's HBM3E passes Nvidia's final approval by the third quarter. With production capacity being concentrated on HBM, server DRAMs and server solid-state drives (SSDs) for AI applications, conventional supply of PC and mobile memory chips will be constrained in the second half of the year, Samsung said. The mobile devices business suffered a drop in second-quarter operating profit of about 810 billion won from a year earlier due to steeper parts costs, although shipments were steady at 54 million smartphones. Samsung expects overall demand for smartphones in the second half of 2024 to increase from a year earlier, led by growing demand for premium products with AI functions as well as accessories such as smartwatches. The company launched its latest AI-enabled flagship foldable phones and mobile accessories earlier this month to compete with rival Apple in the premium smartphone segment, including a new ring for health monitoring. (Reporting by Joyce Lee and Heekyong Yang; Editing by Sonali Paul)

Samsung flags strong AI demand as profit soars on higher chip prices

Rebounding semiconductor prices stoked by the AI boom lifted June quarter earnings for the world's biggest maker of memory chips, smartphones and TVs from a low base a year ago. Samsung's share price rose 0.9% in morning trade versus a 0.5% rise in the benchmark index. Operating profit rose to 10.4 trillion won ($7.52 billion) in April-June, up from 670 billion won a year earlier, Samsung said. It was Samsung's highest operating profit since the third quarter of 2022, spurred by the chip division returning to form as the tech giant's cash cow after a slump caused by weak post-pandemic demand for gadgets that use the chips. The chip division reported a 6.45 trillion won profit, its highest since the second quarter of 2022, and its second consecutive quarterly profit. Explosive demand for high-end DRAM chips such as high bandwidth memory (HBM) chips used in AI chipsets, as well as chips used in data centre servers and gadgets that run AI services have helped to lift chip prices. Samsung said its HBM second-quarter revenue rose about 50% from the previous quarter. South Korean rival SK Hynix also said last week demand for AI chips will continue to get stronger, as it posted its highest quarterly profit since 2018. Samsung has yet to meet AI chip leader Nvidia's standards for fifth-generation HBM chips called HBM3E, though Samsung's fourth-generation HBM - dubbed HBM3 - has been cleared by Nvidia for use in its less-sophisticated graphics processor called the H20, developed for the Chinese market, sources have told Reuters. Samsung forecasted its HBM3E sales would take up 60% of all HBM sales by the fourth-quarter. With production capacity being concentrated on HBM, server DRAMs and server solid-state drives (SSDs) for AI applications, conventional supply of PC and mobile memory chips will be constrained in the second half of the year, Samsung said. The mobile devices business suffered a drop in second-quarter operating profit of about 810 billion won from a year earlier due to steeper parts costs and higher marketing and development costs for AI services, although shipments were steady at 54 million smartphones. Samsung expects overall demand for smartphones in the second half of 2024 to increase from a year earlier, led by growing demand for premium products with AI functions as well as accessories such as smartwatches. The company launched its latest flagship foldable phones and mobile accessories earlier this month to compete with rival Apple in the premium smartphone segment, including a new ring for health monitoring. ($1 = 1,383.0100 won) (Reporting by Joyce Lee and Heekyong Yang; Editing by Sonali Paul)

Samsung flags strong AI demand as second-quarter profit soars on higher chip prices

* Samsung says AI servers to take larger slice of memory market SEOUL, July 31 (Reuters) - Samsung Electronics forecasted robust artificial intelligence-driven demand for chips in the second half of this year, as it reported a more than 15-fold rise in its second-quarter operating profit. "In the second half of 2024, AI servers are expected to take up a larger portion of the (memory) market as major cloud service providers and enterprises expand their AI investments," Samsung said in a statement. Rebounding semiconductor prices stoked by the AI boom lifted June quarter earnings for the world's biggest maker of memory chips, smartphones and TVs from a low base a year ago. Samsung's share price rose 1.1% in morning trade versus a 0.3% rise in the benchmark index. Operating profit rose to 10.4 trillion won ($7.52 billion) in April-June, up from 670 billion won a year earlier, Samsung said. That was in line with its own estimate of 10.4 trillion won flagged earlier this month. It was Samsung's highest operating profit since the third quarter of 2022, spurred by the chip division returning to form as the tech giant's cash cow after a slump caused by weak post-pandemic demand for gadgets that use the chips. The chip division reported a 6.45 trillion won profit, its highest since the second quarter of 2022, and its second consecutive quarterly profit. Explosive demand for high-end DRAM chips such as high bandwidth memory (HBM) chips used in AI chipsets, as well as chips used in data center servers and gadgets that run AI services have helped to lift chip prices. With production capacity being concentrated on HBM, server DRAMs and server solid-state drives (SSDs) for AI applications, conventional supply of PC and mobile memory chips will be constrained in the second half of the year, Samsung said. ($1 = 1,383.0100 won) (Reporting by Joyce Lee and Heekyong Yang; Editing by Sonali Paul)

Samsung second-quarter operating profit soars 1,458% as AI demand remains strong; results top estimates

Samsung Electronics on Wednesday reported higher-than-expected second-quarter revenue and operating profit, as demand for its advanced memory chips that are crucial for artificial intelligence training remained strong. Here are Samsung's second-quarter results versus analysts' average estimates according to LSEG. Samsung's revenue for the quarter ended June jumped 23.42% from a year earlier, while operating profit soared 1,458.2%. High-bandwidth memory chips are crucial for AI chips - which have seen a huge demand enabled by the AI boom. This has largely benefitted firms such Samsung Electronics and SK Hynix, the top two memory chipmakers in the world. "With memory's average selling prices expected to continue their uptrend for next several quarters we foresee a quarterly sequential profit growth for Samsung Electronics until 2025," CLSA said in a report earlier this month following Samsung's second-quarter forecasts. "After Nvidia and global chip makers announced an AI semiconductor roadmap recently, we foresee a memory price hike trend until 1H25. We attribute this to greater concerns about memory supply amid robust demand for HBM and high density enterprise SSD, which use more wafers, with increased production lead time," SK Kim of Daiwa Capital Markets said in a report last month. SDD, or solid-state drive, refer to a semiconductor-based storage device found in computers. Business for the world's largest memory chip maker rebounded as memory chip prices recovered on AI optimism last year. The South Korean electronics giant saw record losses in 2023 as the industry reeled from a post-Covid slump in demand for memory chips and electronics.

Samsung flags strong AI demand as second-quarter profit soars on higher chip prices

By Joyce Lee and Heekyong Yang SEOUL (Reuters) -Samsung Electronics forecasted robust artificial intelligence-driven demand for chips in the second half of this year, as it reported a more than 15-fold rise in its second-quarter operating profit. "In the second half of 2024, AI servers are expected to take up a larger portion of the (memory) market as major cloud service providers and enterprises expand their AI investments," Samsung said in a statement.

Samsung profits soar nearly 1500pc amid AI chip demand

The South Korean giant expects AI servers to take up a larger portion of the market in H2 as cloud service providers and enterprises expand AI investments. Samsung has posted strong earnings for its second financial quarter, with operating profit up nearly 1500pc from last year thanks to soaring demand for AI chips globally. The electronics giant posted more than 74trn Korean won in revenue and an operating profit of 10.44trn Korean won. Samsung attributed this to "favourable market conditions" that drove higher sales prices as well as "robust" OLED panel sales. The latest earnings announced today (31 July) is in line with guidance posted earlier this month, when Samsung said it expects to make operating profit of between 10.3trn and 10.5trn Korean won in its second quarter of 2024 - more than 15 times the 670m Korean won in profits it made in the same period last year. It also expected revenue to be in the region of 73trn to 75trn Korean won, higher than the 60trn it raked in in the second quarter of last year. It posted sales of 71.92trn Korean won in its first quarter this year. Samsung said that the memory market has seen continued recovery, a demand that it says has increased because of AI investments by cloud service providers and growing demand for AI from businesses for their on-premises servers. PC demand, on the other hand, was relatively weak, Samsung said, while demand for mobile products remained solid on the back of increased orders from Chinese original equipment manufacturer customers. Demand from server applications was "robust", with second quarter earnings improving significantly from the previous quarter as Samsung responded to demand for products for generative AI applications. Now, the company expects AI servers to take up a larger portion of the market in the second half of 2024 as major cloud service providers and enterprises expand their AI investments. Samsung also said its foundry business expects a rebound in mobile demand and overall growth. "In the second half of the year, the release of new smartphones from major customers and potential replacement demand with the adoption of AI is expected to lead to an increase in mobile display sales," Samsung wrote. "However, competition among panel makers is likely to be more intense than in the first half." Comeback and strikes Headquartered near Seoul in South Korea, Samsung is the world's largest maker of memory chips, smartphones and TVs. Its latest earnings mark a strong comeback after it was forced to cut its global chip production ahead of a profit plunge last year. It also fared underwhelmingly in the smartphone market amid stiff competition. However, the company has been turning things around. A focus on generative AI, a key feature of its latest flagship smartphone model Galaxy S24, has helped the company regain a lead in the smartphone market and the demand for AI helped its profits rise back up this year. Samsung unveiled a new range of foldable smartphones and smartwatches, infused with advancements in generative AI, at its Unpacked event earlier this month. The company also announced a bigger pivot into the health monitoring market, with the launch of Galaxy Ring, a wearable device that gives users detailed reports on their health. But as profit continue to increase, Samsung has also faced strikes from thousands of workers "in the face of the company's neglect of labourers". Earlier this month, the National Samsung Electronics Union, which has approximately 30,000 members, were on strike for better pay for its workers, as well as an additional day of annual leave and changes to the employee bonus system. According to Reuters, the most recent talks between the company and workers ended without results. Find out how emerging tech trends are transforming tomorrow with our new podcast, Future Human: The Series. Listen now on Spotify, on Apple or wherever you get your podcasts.

Samsung reports robust Q2, amid strong AI demand By Investing.com

Investing.com - Samsung (LON:0593xq) Electronics (KS:005930) reported strong earnings for the second quarter of 2024, with revenue of KRW74.07 trillion and operating profit of KRW10.44 trillion. This was primarily fueled by the escalating demand for memory chips, driven by increased AI investments from major tech companies. Samsung's Memory sector saw growth this quarter, due to heightened AI investments by major clients. The demand for both High Bandwidth (NASDAQ:BAND) Memory (HBM) and traditional DRAM and SSD products saw a substantial rise. The company's advancements in DDR5 technology, including the production of its 128GB 1b nanometer 32Gb DDR5 product, played a crucial role in boosting earnings. Samsung expects sustained high demand for server products such as HBM, DDR5, and SSDs due to ongoing AI investments. The company plans to increase its sales of advanced AI-related products, including HBM3E and high-density server modules based on its latest 1b nano 32Gb DDR5 technology. The S.LSI business saw a 50% surge in revenue year-over-year for the first half of 2024, driven by higher supplies of SoCs, image sensors, and DDIs for flagship products from major customers. The Foundry business posted sequential revenue growth due to a recovery in demand for key applications. Samsung emphasized its strengthened position in the AI and HPC markets, doubling its customer base compared to the previous year. The Device Solutions (DS) division, which includes Mobile, Large Displays, and MX/NW businesses, continued to perform well. The Mobile segment benefited from strong demand for flagship phones and increased sales of rigid panels. Looking forward, Samsung expects ongoing growth in the premium smartphone segment and rising demand for AI-enhanced smartphones. The company aims to solidify its position in foldable devices and expand its ecosystem of products, including tablets, watches, and TWS. Samsung remains positive about its prospects for the latter half of 2024. The company expects continued strong demand for memory chips and semiconductors, driven by advancements in AI and HPC. In the device sector, Samsung plans to leverage new smartphone launches and strengthen its presence in the premium market segment.

Samsung sees strong demand for HBM chips in H2 due to AI applications

Samsung Electronics' (OTCPK:SSNLF) said that in the second half of 2024, AI servers are expected to take up a larger portion of the memory market as major cloud service providers and companies expand their AI investments. Second quarter revenue for the whole group surged about 23% year-over-year to KRW74.07T, while operating profit rose about 9.78% year-over-year to KRW10.44T The South Korean tech giant said favorable memory market conditions drove higher average sales price, or ASP, while sales of OLED panels also contributed to the results. Memory Business: The Device Solutions (DS) unit saw revenues grow 94% year-over-year to KRW28.56T. Out of this, Memory business generated KRW21.74T, soaring 142% year-over-year. Samsung said the growth was driven by strong demand for High Bandwidth Memory, or HBM, and conventional DRAM and server SSDs, while the memory market as a whole continued its recovery. The increased demand was due to continued AI investments by cloud service providers and growing demand for AI from businesses for their on-premise servers, Samsung added. PC demand was relatively weak, while demand for mobile products remained solid due to increased orders from Chinese original equipment manufacturer, or OEM, customers. Samsung noted that demand from server applications continued to be robust, with second quarter results improving from the previous quarter as it responded to demand for high-value-added products for generative AI applications. In addition, Samsung said that boosted its leadership in the DDR5 market through the mass production of a 128GB product based on 1b nanometer(nm) 32Gb DDR5, which was developed for the first time in the industry. Memory business Outlook H2: Samsung said AI servers are expected to take up a larger portion of the market as cloud service providers and companies expand their AI investments. Demand is expected to remain strong across the board from HBM and DDR5 to server SSDs, according to the company. However, conventional bit supply of cutting-edge products for PC and mobile is expected to be constrained. Samsung said it will expand capacity to increase the portion of HBM3E sales. Earlier this month, it was reported that Samsung' fourth-generation HBM3 chips were cleared by Nvidia (NVDA) for use in the U.S. company's processor for the first time. Samsung stated that it will also focus on high-density products, such as server modules based on the 1b-nm 32Gb DDR5 in server DRAM. System LSI Business: The unit posted record-high sales for the first half of 2024 as it saw earnings improve in the second quarter due to increased supply of key components such as systems on chips, or SoCs, image sensors and display driver ICs (DDIs) for major flagship products. Samsung noted that initial response to the new SoC for wearables, which features the industry's first 3nm technology, has been favorable and adoption of SoCs featuring this technology by key customers is expected to expand in the second half of the year. The company also plans to ensure a stable supply of the Exynos 2500 for flagship models. Foundry Business: The unit saw improved earnings due to increased demand across applications. Due to higher orders for sub-5nm technology, the number of AI and high-performance computing, or HPC, customers grew two-fold from a year earlier. The business also distributed the process development kit for 2nm Gate-All-Around, or GAA, technology to customers ahead of mass production in 2025. Outlook H2 Foundry: In the second half of 2024, the company expects a rebound in mobile demand and growth in demand for AI/HPC applications. The foundry market is expected to experience growth overall, mainly in advanced nodes. Foundry 2024 Outlook: For 2024, on the back of mass production of second-generation 3nm GAA technology, Samsung expects growth to outpace the market. The company noted the Foundry Business plans to continue expanding orders for AI/HPC applications and aims to increase the customers by fourfold and sales by ninefold by 2028 compared to 2023. Digital eXperience (DX): Sales from the DX segment rose 5% year-over-year to KRW42.07T. The company said that overall market demand for smartphones declined sequentially, mainly in the premium segment, as seasonal trends continued in the smartphone market. The MX Business recorded a sequential decline in revenue, the Galaxy S24 series saw double-digit year-on-year growth in both shipments and revenue over its predecessor for both the second quarter and the first half of the year. Profitability declined slightly compared to the previous quarter, mainly due to increased costs from the rising prices of key components. Outlook: In the second half, Samsung said that overall demand for smartphones is expected to increase year-on-year, with increased demand for premium products driven by demand for AI and launch of new products with innovative features. The company added that the MX Business intends to seek revenue growth by expanding sales of flagship smartphones and ecosystem products. Samsung Display Corporation (SDC): The unit's revenue grew 18% year-over-year to KRW7.65T. The mobile display business posted sales growth, driven by solid demand for flagship products. Outlook: In the second half of 2024, the release of new smartphones from major customers and potential replacement demand with the adoption of AI is expected to lead to an increase in mobile display sales, according to the company However, competition among panel makers is likely to be more intense than in the first half. More on Samsung Electronics Samsung Electronics Co., Ltd. (SSNLF) Q2 2024 Earnings Call Transcript Samsung Electronics Co., Ltd. 2024 Q2 - Results - Earnings Call Presentation EWY Set To Gain From Current Semiconductor Upcycle Led By SK Hynix, Samsung Samsung Electronics GAAP EPS of KRW1419.00, revenue of KRW74.07T Samsung may replace Sony as Apple's image sensor supplier: analyst

Samsung eyes aggressive HBM expansion to meet AI demand

Samsung Electronics' flag waves at the company's office in Seocho District, Seoul, in this July 7, 2023 photo. Newsis Bullish chip biz buoys tech giant's Q2 profit to $7.5 bil.By Nam Hyun-woo Samsung Electronics projected an ambitious expansion in its sales and supply of high bandwidth memory (HBM) for the second half of this year, Wednesday, to meet exponentially growing market demand for the advanced memory chips that power generative artificial intelligence (AI) services. The company noted that it will start supplying fifth-generation eight-layer HBM3E chips to its clients in the third quarter of this year. Additionally, it plans to begin mass production of twelve-layer HBM3E chips and start supplying them in the latter half of the year. Samsung reported sales of 74.07 trillion won ($53.64 billion) and an operating profit of 10.44 trillion won for the April to June period, with memory chips serving as a key indicator of the company's performance. Revenues rose by 23.44 percent compared to a year ago, while operating profit surged 14.5 times from 670 billion won during the same period. Samsung Electronics' earnings for the second quarter of 2024 During an earnings conference call, Kim Jae-joon, executive vice president of Samsung's memory chip division, said second-quarter HBM sales grew in the mid-50 percent range from three months earlier and forecast a two- to four-fold increase in HBM sales every quarter. HBM vertically stacks DRAM chips to save space and power, thereby serving as a key component in graphics processing units (GPU) produced by companies like Nvidia. "In the second half of this year, revenues from HBM will be 3.5 times higher than the first half," Kim said. "We have been expanding our HBM capacity continuously. According to our latest sales plan, we have secured nearly four times the volume of (HBM) orders with customers compared to last year." Samsung's optimistic outlook is bolstered by the HBM3E chips. The company reported that fourth-generation HBM3 chips accounted for two-thirds of total HBM sales in the first half of this year. However, HBM3E sales are expected to quickly surpass this, accounting for 60 percent of total HBM sales by the fourth quarter. "We have provided samples of eight-layer HBM3E chips to clients and will begin supplying them in the third quarter of this year according to their schedules," Kim said. "Also, the company has finished preparations to mass produce 12-layer HBM3E, with plans to begin supply in the second half of this year." HBM3E chips have been the subject of keen market attention, as Samsung has not been supplying those chips to Nvidia, one of the biggest clients. Earlier reports alleged that Nvidia's qualification tests for Samsung's HBM3E chips are dragging on, while Samsung neither confirmed nor denied those reports. Samsung Electronics' 12-layer HBM3E / Courtesy of Samsung Electronics Although Kim refrained from commenting on whether the supply would include Nvidia, the company's projection of a rapid increase in HBM3E supply suggests that it may begin supplying those chips to Nvidia in the near future. KB Securities analyst Kim Dong-won noted, "Samsung's HBM3E chips are expected to pass Nvidia's qualification tests in August or September ... Given the soaring demand, it is expected that NVIDIA will need to diversify its HBM supply sources starting in the second half of this year." Against this backdrop, Samsung's stellar second-quarter earnings were attributed to the recovery of its memory business. In the second-quarter earnings report, the company's Device Solutions division, which is in charge of memory chips and other semiconductor businesses, reported an operating profit of 6.45 trillion won, accounting for more than 60 percent of total operating profit. Samsung said strong demand for generative AI servers and enterprise-owned servers resulted in an overall recovery of memory chip market. The firm also projected that demand for DRAM and NAND products will remain strong in the second half of the year and into next year. However, its supply of conventional memory chips will be limited in the second half due to a focus on HBM chips. It added that clients are striving to secure production capacity for next year's supply. The company's Device Experience division, which is in charge of smartphones, TV and other devices, suffered a 1.11 percent year-on-year drop in operating profit to 2.72 trillion won, despite a 5 percent growth in sales. The lackluster performance was attributed to increased costs for raw materials, as well as higher marketing and development expenses for AI services. Buoyed by the solid earnings, Samsung Electronics shares closed at 83,900 won, up 3.58 percent from a day earlier.