Samsung Electronics Co’s profit rebounded sharply in the first quarter, reflecting a turnaround in the company’s pivotal semiconductor division and robust sales of Galaxy S24 smartphones.
The world’s largest maker of memory chips yesterday reported preliminary operating profit of about 6.6 trillion won (US$4.9 billion), compared with analyst estimates of 5.37 trillion won.
The increase snapped a run of consecutive quarterly declines that began in the third quarter of 2022.
Photo: AFP
Revenue rose to about 71 trillion won during the quarter, compared with projections for 71.8 trillion won. Shares slipped about 1 percent in early Seoul trading.
“Revenue came short of expectations,” Counterpoint Research director Tom Kang said.
The preliminary results signal that the business is back to normal, Kang said.
“Chip production reduction was the right move and Samsung is now on its path to benefit from the AI [artificial intelligence] trend in both semiconductors and smartphones,” he said.
Samsung is to announce full earnings with divisional breakdowns on April 30.
The results underscore how demand for memory chips that power modern electronics is starting to rebound after a severe downturn in the industry.
Stronger pricing for memory chips is helping, too.
Major DRAM producers increased prices by 7 percent to 10 percent on average in the first quarter as inventory levels normalized for products such as smartphones and PCs, said Akshara Bassi, a senior analyst at Counterpoint Research.
Kyung Kye-hyun, Samsung’s chief executive officer in charge of its semiconductor business, said at the company’s annual shareholders’ meeting on March 20 that its semiconductor business should recover to 2022 levels this year as the longstanding market slump begins to end.
The company averaged operating profit of more than 10 trillion won a quarter that year.
Kyung discussed how Samsung is pushing its advanced packaging business after setting up a dedicated team last year.
Part of his optimism coincided with Nvidia Corp cofounder Jensen Huang’s (黃仁勳) endorsement of Samsung as a supplier of high-bandwidth memory (HBM) chips, critical components of the graphic processors that train AI systems.
HBM is a key part of Samsung’s effort to be the world’s leading chipmaker, as the one part of the memory market where Samsung does not enjoy a clear lead over its competition.
The company said that its HBM sales rose by more than 40 percent in the fourth quarter last year and that memory demand showed signs of recovery.
“AI — specifically the shift to on-device generative-AI — will become a key catalyst to increased demand, resulting in continued price increases through the rest of the year,” Bassi said. “Samsung is well positioned to capture AI-led deployments with its latest high-capacity HBM product and potential collaboration with Nvidia.”
Fund managers have begun shifting money into Seoul-listed Samsung to ride its expected bounce.
While the stock price of AI titan Nvidia has tripled in the past 12 months and its key HBM supplier, SK Hynix, has more than doubled, Samsung is seen having greater upside after a mere 32 percent gain.
“We’ve started reducing our holding in SK Hynix and allocating it to other parts of the memorychip value chain that haven’t benefited as much, like Samsung Electronics, where we think that upside hasn’t yet been realized,” said Christine Phillpotts, portfolio manager at Ariel Investments LLC. “We expect some catalyst to occur for that upside to be materialized in Samsung.”
Samsung has outperformed other AI stocks since an endorsement by Huang in March fueled expectations for an HBM supply deal later this year.
That would help it gain a key foothold in the battle with smaller SK Hynix, which is estimated to have a 90 percent share in the latest version of HBM.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday obtained the government’s approval to inject an additional US$7.5 billion into its US subsidiary, the Department of Investment Review said in a statement. The department approved TSMC’s application of investing in TSMC Arizona Corp, which is engaged in the manufacturing, sales, testing and design of IC and other semiconductor devices, it said. The latest capital injection follows a US$5 billion investment for TSMC Arizona approved in June. The chipmaker has broken ground on two advanced fabs in Arizona with aggregated investments approved by the department totaling US$24 billion thus far. According to TSMC, the first Arizona
The lethal hack of Hezbollah’s Asian-branded pagers and walkie-talkies has sparked an intense search for the devices’ path, revealing a murky market for older technologies where buyers might have few assurances about what they are getting. While supply chains and distribution channels for higher-margin and newer products are tightly managed, that is not the case for older electronics from Asia where counterfeiting, surplus inventories and complex contract manufacturing deals can sometimes make it impossible to identify the source of a product, analysts and consultants say. The response from the companies at the center of the booby-trapped gadgets that killed 37
FRIENDLY TAKEOVER: While Qualcomm Inc’s proposal to buy some or all of Intel raises the prospect of other competitors, Broadcom Inc is staying on the sidelines Qualcomm Inc has approached Intel Corp to discuss a potential acquisition of the struggling chipmaker, people with knowledge of the matter said, raising the prospect of one of the biggest-ever merger and acquisition deals. California-based Qualcomm proposed a friendly takeover for Intel in recent days, said the sources, who asked not to be identified discussing confidential information. The proposal is for all of the chipmaker, although Qualcomm has not ruled out buying some parts of Intel and selling off others. It is uncertain whether the initial approach would lead to an agreement and any deal is likely to come under close antitrust scrutiny
SECURITY CONCERNS: The proposed ban on Chinese autonomous vehicle software and hardware would go into effect with the 2027 and 2030 model years respectively The US Department of Commerce today is expected to propose prohibiting Chinese software and hardware in connected and autonomous vehicles on US roads due to national security concerns, two sources said. US President Joe Biden’s administration has raised concerns about the collection of data by Chinese companies on US drivers and infrastructure as well as the potential foreign manipulation of vehicles connected to the Internet and navigation systems. The proposed regulation would ban the import and sale of vehicles from China with key communications or automated driving system software or hardware, said the two sources, who declined to be identified because the