Heightening demands for HBM with the spread of AI (Image courtesy of Yonhap)
SEOUL, July 31 (Korea Bizwire) – Samsung Electronics Co. said Wednesday sales of high-performance high bandwidth memory (HBM) products soared more than 50 percent in the second quarter from three months earlier, driven by a boom in generative artificial intelligence.
This image provided by Samsung Electronics Co. shows its latest HBM3E 12H chips. (Image courtesy of Yonhap)
“The memory market continued to be strong in the second quarter, fueled by strong demand for generative AI,” Kim Jae-joon, vice president of Samsung Electronics, said during an earnings call. “HBM sales increased by more than 50 percent on-quarter.”
He said mass production of the company’s eight-layer HBM3E will begin in the third quarter, indicating that the company has secured a client for these chips, believed to be U.S. AI chip giant Nvidia Corp., a major player in the AI semiconductor market with its graphics processing units.
“As we prepared for mass production of the eight-layer HBM3E products last quarter, we provided samples to our major customers, and they are currently undergoing testing smoothly,” Kim said, adding the latest 12-layer products will also become available in the second half of the year.
His comment followed recent news reports suggesting that Samsung Electronics’ eight-layer HBM3E chips are expected to pass Nvidia’s quality tests soon, after some challenges over the past few months.
The company said it is now working on developing the sixth-generation HBM4 and aims to begin production within the first half of next year.
Meanwhile, Samsung Electronics said the ongoing strike has had little impact on the company’s production and vowed to do its best to resolve the dispute as soon as possible.
Samsung Electronics’ Seocho building in Seoul (Image courtesy of Yonhap)
The company’s largest labor union, the National Samsung Electronics Union, has been on a full-scale strike since July 8, demanding a 5.6 percent increase in basic pay and other benefits.
Management and the labor union resumed wage negotiations earlier this week.
Earlier in the day, Samsung Electronics reported that its second-quarter operating profit surged more than 15 times from a year earlier on the robust performance of its semiconductor business.
The world’s largest mobile phone and memory chip maker’s operating profit reached 10.44 trillion won (US$7.54 billion) in the April-June period, compared with 668.5 billion won a year ago, the company said in a regulatory filing.
It is the first time that Samsung Electronics posted an operating profit of more than 10 trillion won in seven quarters since the third quarter of 2022.
Its sales jumped 23.4 percent on-year to 74.06 trillion won and net profit soared 471 percent to 9.84 trillion won.
The earnings exceeded market expectations. The average estimate of operating profit by analysts stood at 10.29 trillion won, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.
Samsung Electronics said it invested 8.05 trillion won in research and development in the quarter ending in June. It also spent 12.1 trillion won in facility investment, including 9.9 trillion won in the semiconductor sector.
The company said its chip business earned 28.6 trillion won in sales for the three-month period through June, with an operating profit of 6.45 trillion won.
It marked the first quarterly operating profit for the company’s flagship business in more than one year as it had remained in the red for five consecutive quarters since the first quarter of 2023.
The strong performance was driven by increasing demand for memory chips, including those for artificial intelligence servers and solid-state drives.
To ensure stable earnings in the memory segment, Samsung Electronics said it has plans to expand sales of HBM products in the second half, focusing particularly on the fifth-generation HBM3E, to meet the growing demand for AI chips.
“We plan to actively respond to the demand for high-value-added products for AI and will expand capacity to increase the portion of HBM3E sales,” Samsung Electronics said in a release. “We will also focus on high-density products, such as server modules based on the 1b-nm 32Gb DDR5 in server DRAM.”
Its foundry, or contract chip manufacturing, businesses saw improved earnings in the second quarter as a result of increased demand across applications.
In the second half, Samsung Electronics anticipates the foundry business will experience a rebound in mobile demand and continued high growth in demand for AI and high performance computing applications.
German athletes for the 2024 Summer Olympics pose for a photo after receiving the Olympic edition of the Galaxy Z Flip 6 smartphone at Samsung Electronics Co.’s Village Plaza in Paris, France, in this photo provided by Samsung Electronics. (PHOTO NOT FOR SALE) (Yonhap)
Samsung Electronics’ business for mobile and other devices posted 42.7 trillion won in sales and 2.7 trillion won in operating profit in the second quarter.
The mobile division’s second-quarter sales decreased from three months earlier due to waning demand for smartphones. But sales and shipments of its latest Galaxy S24 series, released in January, outnumbered those of its predecessor, Galaxy S23, both in the second quarter and the first half.
“In the second half of 2024, overall demand for smartphones is expected to increase year-on-year, with increased demand for premium products, driven by growing demand for AI and the launch of new products with innovative features,” the company said.
Samsung Electronics’ TV business also expanded in the April-June period thanks to global sporting events, such as the 2024 Paris Summer Olympics, while its conventional home appliance segment was on a gradual recovery on increasing demand for air conditioners and new products.
(Yonhap)
