Electronics major Samsung reported a significant increase in first-quarter operating profits, which grew more than tenfold to 6.6 trillion won (USD 4.8 billion), compared to 640 billion won a year earlier.
The increase in profits is largely attributed to a sharp rise in demand for artificial intelligence (AI) applications, which has nearly doubled the sales of the company's memory chips from the previous year.
The South Korean tech giant, which is the world's largest manufacturer of memory chips and televisions, indicated that the rise in memory chip prices was a crucial factor behind the impressive quarterly figures. Memory chip revenue alone climbed 96 per cent to 17.49 trillion won. This recovery followed what was an unprecedented downturn in the memory chip market, spurred by a post-pandemic decline in demand for electronics.
Looking ahead, Samsung remains optimistic about the second half of 2024. Despite the ongoing concerns over macroeconomic instability and geopolitical tensions, the company said it expected the demand for AI technology to remain robust, continuing to propel the sales of memory chips and other tech devices. This outlook is underpinned by the recent start of mass production of Samsung’s latest high bandwidth memory chips, known as 8-layer HBM3E, specifically designed for use in generative AI chipsets.
The AI boom has not only helped Samsung turn around its fortunes in the memory chip sector but also promises to be a key driver of future growth. Additionally, the company plans to commence production of a more sophisticated 12-layer version of the memory chip within this quarter.
In contrast, Samsung's mobile devices business experienced a slight dip in operating profit, which fell to 3.51 trillion won from 3.94 trillion won a year earlier, largely due to increased costs, including those for memory chips. These rising costs have impacted the profitability of Samsung's flagship Galaxy S24 smartphones, launched during the quarter.
