Samsung eyes chip recovery in Q2 with its improved HBM3E

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Samsung eyes chip recovery in Q2 with its improved HBM3E

A visitor uses a Samsung Electronics' flagship smartphone Galaxy S24 during its unveiling ceremony in Seoul on Jan. 15, 2024. [REUTERS/YONHAP]

A visitor uses a Samsung Electronics' flagship smartphone Galaxy S24 during its unveiling ceremony in Seoul on Jan. 15, 2024. [REUTERS/YONHAP]

 
Samsung Electronics cautioned that memory chip demand would remain sluggish this quarter, citing U.S. export restrictions on advanced AI chips to China and a slow recovery in the mobile and PC markets.
 
However, the company expects a rebound from the second quarter, driven by rising demand for on-device AI and the resumption of delayed hyperscale data center projects.
 
“In addition to the impact of recent U.S. semiconductor export controls, a temporary demand gap for HBM is expected as major customers shift their orders to our enhanced products following our product upgrade announcement,” said Kim Jae-june, executive vice president of Samsung’s memory chip business, during a conference call Friday.
 
“Starting from the second quarter, customer demand is expected to transition from eight-layer to 12-layer HBM,” he added.
 
Samsung plans to begin full-scale shipments of its updated HBM3E chips in the second quarter, aiming to double its HBM supply this year compared to 2024.
 
The company posted a 15.1 trillion won ($10.4 billion) profit in chips in 2024, only the second year it fell behind crosstown rival SK hynix, the first coming in 2023, when both suffered major losses due to an industry downturn.
 
The Korean tech giant announced its 2024 annual and fourth-quarter earnings Friday.
 
Operating profit for its semiconductor division rebounded to 15.1 trillion won in 2024 from a 14.9 trillion won loss the prior year. SK hynix, by contrast, posted 23.5 trillion won in chip profit as it solidified its position as a key supplier to AI chip leader Nvidia.
 
For the fourth quarter, Samsung reported a 2.9 trillion won chip profit on 30.1 trillion won in revenue.
 
Samsung’s total annual revenue reached 300.9 trillion won, up 16.2 percent on year, while annual profit surged 398.3 percent to 32.7 trillion won, though both narrowly missed market expectations of 303.1 trillion won in revenue and 34.8 trillion won in profit, according to FnGuide data.
 
The Device eXperience division, which oversees Samsung’s mobile and TV businesses, generated 174.9 trillion won in revenue, up 3 percent from a year ago, driven by strong Galaxy S24 sales. Operating profit, however, declined 1.9 percent to 12.4 trillion won.
 
Samsung’s capital expenditure hit a record 53.6 trillion won in 2024, the company said, with 46.3 trillion won allocated to semiconductor research and development and the expansion of advanced chip production facilities, particularly for HBM.
 
The company’s earnings recovery hinges on its HBM business. Kim emphasized efforts to strengthen its high-value memory portfolio — including HBM, DDR5, LPDDR5X and GDDR7 — to drive up average sales prices.
 
Samsung reported that HBM sales rose 1.9 times in the fourth quarter of 2024 from a year earlier, while shipments of its latest HBM3E surpassed those of HBM3 during the same period.
 
The world's biggest memory chip producer still lags behind SK hynix in HBM technology as it struggles to become a major supplier of the premium memory chips for Nvidia's latest AI processors.
 
Nvidia CEO Jensen Huang has noted earlier this year that Samsung needs to engineer a "new design" to get its approval.
 
Earlier in the day, Bloomberg reported that Samsung’s eight-layer HBM3E chip had received Nvidia’s approval for use in processors intended for the Chinese market. Samsung declined to confirm the report.

BY JIN EUN-SOO [[email protected]]
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