Samsung Profits Surge on AI Boom

Samsung Electronics reported a ten-fold surge in its Q1 operating profit, driven by robust demand for AI technologies and a tightening supply of high-end memory chips.

This upswing in profits increased Samsung's shares by 1.8% following the announcement. The South Korean juggernaut, the world's largest memory chip maker, started mass production of its latest 8-layer High Bandwidth Memory (HBM) chips this month, designed specifically for generative AI chipsets.

Samsung is making a strategic move to strengthen its position in the AI market. It plans to triple its chip supply related to HBM in 2024 compared to the previous year. Additionally, Samsung is set to launch a more advanced 12-layer version of HBM in the second quarter. The company predicts that these new HBM3E chips will make up two-thirds of its HBM output by the end of the year.

Financially, Samsung's first-quarter revenue increased by 13% to 71.9 trillion won ($52.14 billion). Revenue from memory chips alone skyrocketed by 96% to 17.49 trillion won, thanks to sharp price increases after a previous downturn. This boom was largely fueled by the ongoing AI surge.

What Does This Mean for Me?

The operating profit for the first quarter increased to 6.6 trillion won, which is the highest it has been since the third quarter of 2022. Despite facing challenges such as rising costs that have impacted margins on its new Galaxy S24 smartphones, Samsung's mobile devices division has managed to maintain a strong profitability margin. This has been largely supported by the AI-driven popularity of the S24 models.