Samsung forecasts AI-driven chip demand surge

Samsung forecasts AI-driven chip demand surge is profiled by BTW Media because published evidence links it to internet infrastructure, governance, operational dependencies, or market visibility.

• In the second half of this year, Samsung Electronics anticipates a considerable marketplace for artificial intelligence-driven chips.
• Samsung’s chip division posted its highest profit since Q2 2022, fuelled by increased demand for high-end DRAM chips used in AI applications.

OUR TAKE
Samsung Electronics projects a strong demand for AI-driven chips in the latter half of 2024, bolstered by a significant recovery in semiconductor prices. This optimistic outlook, coupled with a 15-fold surge in second-quarter operating profit, underscores the chip division’s fulcrum role in driving the company’s financial rebound from last year’s low base.
-Vivienne Xie, BTW reporter

What happened

Samsung Electronics has projected robust demand for chips driven by artificial intelligence (AI) in the latter half of this year, as it reported a significant surge in its second-quarter operating profit. The AI boom aggravated a rebound in semiconductor prices, causing earnings to rise more than 15-fold from the previous year’s low base

“In the second half of 2024, AI servers are expected to dominate a larger share of the memory market as major cloud service providers and enterprises ramp up their AI investments,” Samsung said. A 0.7% rise in Samsung’s share price during morning trade reflected this optimism, compared to a 0.3% rise in the benchmark index.

Samsung’s operating profit soared to $7.56 billion from $4.87 billion a year earlier, marking its highest operating profit since the third quarter of 2022. A strong performance in its chip division facilitated to the revival, which has reclaimed its status as the company’s primary revenue generator after a slump due to weak post-pandemic demand for consumer electronics.

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Why it’s important

The chip division posted a profit of $4.69 billion, its highest since Q2 2022, marking its second consecutive quarterly profit. The surge in demand for high-end DRAM chips, such as high bandwidth memory (HBM) chips used in AI applications, data centre servers, and AI-driven gadgets, contributed to rising chip prices. Samsung noted that its HBM revenue increased by approximately 50% from the previous quarter.

Rival SK Hynix also reported growing demand for AI chips, indicating a robust market. Although Samsung has yet to meet Nvidia’s standards for fifth-generation HBM chips (HBM3E), its fourth-generation HBM3 has been approved for use in Nvidia’s H20 processors developed for the Chinese market. Samsung predicts that HBM3E chips will account for 60% of its HBM sales by Q4, contingent on passing Nvidia’s final approval by Q3. The company also highlighted that production capacity will focus on HBM, server DRAMs, and server solid-state drives (SSDs) for AI applications. It will likely constrain the supply of PC and mobile memory chips in the second half of the year.