Samsung reports chip profits after a year of losses, as AI boom drives fourfold surge in overall income

The world’s largest memory chip maker reported net income of 6.62 trillion won (US$4.8 billion) in the March quarter, versus the average analyst projection for 5.63 trillion won. That is more than four times the company’s earnings a year earlier.

The results underscore how demand for the memory chips that power modern electronics and artificial intelligence is starting to rebound after a severe downturn. The company’s shares rose as much as 2.4 per cent in Seoul trading.

Samsung, also the world’s largest smartphone maker, is trying to reverse a year-long decline triggered by global economic uncertainty. In 2023, the company’s overall operating profit plunged to a 15-year low after its semiconductor unit posted a loss of 14.9 trillion won.

Signs are pointing to a gradual market rebound, driven in part by demand for chips used to develop AI after the advent of OpenAI’s ChatGPT.

Samsung’s chip division posted a better-than-projected 1.91 trillion won operating profit, its first profitable quarter after four successive losses. South Korean trade data released this month showed semiconductor shipments led growth in the country’s exports in the first 20 days of April, rising 43 per cent from a year earlier.

In its earnings release, Samsung said it expects chip demand to remain strong in the current quarter and the second half of this year. It said that the industry should remain strong, in large part because of the demand for generative AI.

Microsoft and Alphabet, Google’s parent company, reported financial results last week that beat analysts estimates, in part because of AI services.

“Samsung is lagging behind in AI semiconductors, and also they’re struggling with the utilisation rates” in their foundry business, Daiwa Securities