The Samsung brand is on show at their pavilion through the Cell World Congress in Barcelona, Spain, on February 28, 2024. (Photograph by Joan Cros/NurPhoto by way of Getty Pictures)
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Samsung Electronics on Wednesday reported higher-than-expected second-quarter income and working revenue, as demand for its superior reminiscence chips which are essential for synthetic intelligence coaching remained robust.
Listed below are Samsung’s second-quarter outcomes versus analysts’ common estimates in line with LSEG.
- Income: 74.07 trillion Korean gained (about $53.45 billion) vs. 73.74 trillion Korean gained
- Working revenue: 10.44 trillion Korean gained vs 9.53 trillion Korean gained
Samsung’s income for the quarter ended June jumped 23.42% from a 12 months earlier, whereas working revenue soared 1,458.2%.
The South Korean large stated strong demand for high-bandwidth in addition to typical reminiscence, corresponding to common dynamic random entry reminiscence, from clients increasing AI investments contributed to the robust efficiency.
For the second half, Samsung stated it expects the demand from server AI to remain robust throughout server merchandise together with HBM, server DRAM and SSD. SDD, or solid-state drive, refers to a semiconductor-based storage gadget.
The agency added that increasing capability to satisfy demand for HBM and server DRAM might additional constrain provide of typical reminiscence chips.
Throughout its earnings name, the agency stated it plans to deal with the AI demand by increasing gross sales of HBM3E —the newest AI reminiscence product — by means of capability enlargement within the second half.
It should additionally develop gross sales of SSDs that are at present in excessive demand for AI servers as nicely.
The agency additionally stated it will pay out a dividend of 361 gained per frequent and most popular share for the second quarter.
“In keeping with our present dividend coverage, the entire quantity distributed per quarter quantities to roughly 2.45 trillion gained, which will likely be paid close to the top of August.”
Samsung shares rose as a lot as 1.35% Wednesday morning.
Reminiscence momentum
HBM reminiscence chips are essential for AI chips – which have seen an enormous demand enabled by the AI increase. This has largely benefitted companies such Samsung Electronics and SK Hynix, the highest two reminiscence chipmakers on this planet.
“With reminiscence’s common promoting costs anticipated to proceed their uptrend for subsequent a number of quarters we foresee a quarterly sequential revenue progress for Samsung Electronics till 2025,” CLSA stated in a report earlier this month following Samsung’s second-quarter forecasts.
Enterprise for the world’s largest reminiscence chip maker rebounded as reminiscence chip costs recovered on AI optimism final 12 months. The South Korean electronics large noticed document losses in 2023 because the business reeled from a post-Covid stoop in demand for reminiscence chips and electronics.
“After Nvidia and world chip makers introduced an AI semiconductor roadmap lately, we foresee a reminiscence worth hike pattern till 1H25. We attribute this to better considerations about reminiscence provide amid strong demand for HBM and excessive density enterprise SSD, which use extra wafers, with elevated manufacturing lead time,” SK Kim of Daiwa Capital Markets stated in a report final month.
Samsung reportedly has cleared the checks for the usage of its HBM3 chips in Nvidia processors for the Chinese language market. SK Hynix has to this point led the HBM reminiscence chip market, having been the only provider of HBM3 chips to Nvidia.
SK Hynix on Thursday logged its highest quarterly revenue because the second quarter of 2018, rebounding from a lack of 2.88 trillion gained in the identical interval a 12 months in the past.
Weaker smartphone demand
Smartphone gross sales declined within the second quarter largely due to the “base impact of launches of recent fashions” within the first quarter. Nevertheless, the Galaxy S24 sequence continued to see robust demand, Samsung stated.
“Smartphone demand decreased sequentially within the seasonally weak quarter, significantly within the premium phase,” the corporate stated, including that it expects the premium phase to develop within the second half although the mass phase would doubtless see a slowdown.
Profitability within the smartphone enterprise additionally dropped as costs of key elements rose.
The agency plans to proceed pushing its premium Galaxy AI merchandise. In its newest transfer, Samsung introduced final week world availability for its latest Galaxy gadgets together with Galaxy Z Fold6, Z Flip6, Watch Extremely and Ring.
“Even in difficult circumstances, we’ll proceed investing in upgrading Galaxy AI performance with a purpose to safe a long run sustainable progress engine,” Samsung stated on Wednesday.
Counterpoint Analysis stated Samsung ought to see “better uptick to its operational efficiency” within the second half, primarily pushed by reminiscence chips and a “premiumisation” pattern of smartphones.
“SK Hynix and Micron although will proceed to problem Samsung in reminiscence each within the AI phase with HBM progress and within the AI smartphone and PC market as nicely with shut tie-ups and optimizations with key compute gamers corresponding to Qualcomm, Intel and Nvidia,” Neil Shah, analysis vp at Counterpoint Analysis, stated in emailed feedback to CNBC.
