Samsung executives are rubbing their hands with glee. The South Korean company, better known for its smartphones, televisions, and home appliances, has seen its sales skyrocket. Notably, it's done so with a product that only a few have paid attention to until now.
Samsung’s revenue grew by 23.42% in the second quarter of 2024 compared to the same period in 2023. But its operating profit rose by a staggering 1,458% or about 14.5 times.
Long live memory chips. This is all because of the price increase of memory chips and their absolute relevance in artificial intelligence systems. Samsung executives said HBM and DRAM memory chip sales and margins led to this profit increase. However, it’s also true that Samsung Device Solutions hasn’t been profitable for more than a year.
The positive outlook will continue. Samsung expects sales of memory chips—HBM and those used in SSDs—to remain at this level for the rest of the year. It has increased the production of HBM and DRAM memory chips for servers, which could affect the production—and prices—of its conventional DRAM chips for PCs and notebooks.
AI is a driver. Nvidia recently certified Samsung's HBM3 memory chips and will purportedly do the same for its HBM3E chips in November, adding to the momentum for Samsung Device Solutions. This type of memory chip is faster and more efficient, making it perfect for the demanding requirements of AI model training and inference. Until now, SK Hynix, Samsung’s primary competitor in this market, has been Nvidia's only supplier of HBM3 chips, but that’s about to change.
After COVID-19, joy. In the post-pandemic era, memory chip prices and sales fell—which allowed users to purchase SSDs at enviable prices—but in recent months, the trend has been just the opposite: Memory chips have increased in price. Demand has also increased for specialized AI graphics cards, especially for HBM chips . This trend is likely to stay the same in the short term.
Smartphones, however, are losing ground. Mobile phone sales fell slightly in the second quarter of the year, which is typical for this time. Still, Samsung claims that sales of its Galaxy S24 line are still strong, although it doesn’t appear that the much-hyped AI features are particularly driving those sales.
This article was written by Javier Pastor and originally published in Spanish on Xataka.
Image | Kote Puerto
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