SEOUL: Samsung Electronics Co’s semiconductor arm has reported a bigger-than-expected 80% surge in profit, suggesting global artificial-intelligence (AI) demand is helping drive a recovery at the South Korean company’s most important business.
The unit, which competes with SK Hynix Inc and US-based Micron Technology Inc, said it will focus next year on mass production of the next generation of high-bandwidth memory or HBM4 – designed to work in tandem with AI accelerators from Nvidia Corp.
The company echoed SK Hynix’s prediction that a spending spree in AI will persist this quarter and into next year. Its shares leapt more than 5% in Seoul.
South Korea’s largest company has been trying to recover from a series of missteps that allowed SK Hynix to seize the lead in memory that boosts AI capabilities.
It’s now trying to get back into that fierce contest, in which big spenders from OpenAI to Meta Platforms Inc are amassing computing power for AI services.
Samsung has earmarked 47.4 trillion won or about US$33bil of capital spending for this year, to expand and upgrade capacity.
Samsung’s chip division posted an operating profit of seven trillion won for the September quarter, compared with analysts’ average projection for 4.7 trillion won.
The memory chip business – a key pillar of Samsung’s empire, which spans smartphones and home appliances – hit record-high quarterly revenue on HBM3E sales, it said.
The company, which reported upbeat preliminary operating profit and revenue earlier this month, said net income totalled 12.01 trillion won, beating estimates for 9.29 trillion won.
Samsung Electronics’ operating-profit margin could expand further in the fourth quarter (4Q) due to its semiconductor division.
The division achieved a 21.1% margin in 3Q compared with 1.4% in 2Q.
Selling prices for both DRAM and NAND chips are rising, while volume could grow in 4Q.
The company’s foundry business might also improve due to more orders for smartphone processors, Bloomberg analysts Masahiro Wakasugi and Takumi Okano said.
The spending spree is spilling over into demand for conventional memory products, where Samsung dominates.
Its stock price is up about 90% since the start of the year, although shares of AI memory leader and home rival SK Hynix have more than tripled in the same period.
Investors are betting on Samsung’s chances of using its scale to gain ground in high-bandwidth memory.
It reclaimed its spot as the top memory maker in terms of revenue in 3Q after AI-related investments bolstered prices and sales volumes of general-purpose DRAM and NAND, according to Counterpoint. — Bloomberg
