Samsung Electronics Co has predicted that the long-depressed memorychip market is heading for recovery, after reporting profit for the third quarter well ahead of analysts’ estimates.
The South Korean giant’s net income totaled 5.5 trillion won (US$4.1 billion) in the third quarter, more than double expectations of 2.52 trillion won, data compiled by Bloomberg showed.
A significant chunk of the profit, 1.9 trillion won, came from a one-time income tax gain.
Photo: AFP
Samsung’s chip division posted a 3.75 trillion won operating loss, narrower than the 4.4 trillion won loss a quarter earlier.
On a conference call, Samsung executives said that artificial intelligence (AI) is driving demand in the technology industry and memorychip inventories are declining after peaking in May.
“It’s very encouraging to see that chip inventory is coming down,” said Park Sang-hyun, an analyst who publishes on the SmartKarma platform. “However, we still need more evidence that ... memory demand is set to recover next year.”
South Korea’s largest company said it plans to trim capital expenditure for the semiconductor division to 47.5 trillion won this year, from 47.9 trillion won last year. Overall, its capital spending for this year is expected to reach a record 53.7 trillion won, compared with 53.1 trillion won last year.
The company’s display division more than doubled operating profit to 1.94 trillion won from the previous quarter.
Samsung said the increase was due to the release of flagship models from major customers, without identifying them.
Samsung’s division that includes its mobile business posted an operating profit of 3.73 trillion won, aided by new Galaxy Z foldable smartphones launched in the second half of this year.
Samsung mobile division vice president Daniel Araujo said that foldables would be “a key engine” for short-term growth.
“We’re open to the possibility of expanding the foldable category from only smartphones into other product groups like laptops and tablets,” Araujo said.
Samsung voiced optimism for the memorychip market overall.
It predicted that prices would rise this quarter compared with the third quarter.
Overall demand for such components would rise with the development of AI applications, such as OpenAI’s ChatGPT, it said.
Samsung executives said they would continue to invest in high-density memory chips, particularly in high-bandwidth memory (HBM), with plans to increase capacity by 2.5 times next year.
HBM is a type of advanced memory chip that stacks DRAM to process data more quickly. It works in tandem with AI hardware such as Nvidia Corp’s graphics accelerators, which speed up data processing for intensive tasks such as training AI models.
“We have already completed supply talks for next year with our key customers for this volume,” Samsung memory division executive vice president Min Jae-june said on the conference call. “We expect the recovery trend in the memory market to accelerate.”
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