The increasing demand for Samsung’s high-end memory chips used in AI applications contributed to the company’s more than fivefold increase in net profit for the first quarter.
An increase from 8.22 trillion won in the previous year brought the net profit for the quarter ending in March to 47.22 trillion won, or almost $31.8 billion. Widespread expansion in its semiconductor sector drove an eightfold increase in operating profit to 57.23 trillion won and a 69.2% increase in revenue to 133.87 trillion won.
Reasons given by the corporation for the record success include the device solutions division’s improved memory prices and strong sales of high-margin AI chips. Another factor that contributed almost 1.8 trillion won to operational profit was the weakening of the Korean won versus the US dollar.
Consistent worldwide investment in AI infrastructure is expected to keep Samsung’s momentum going in the second quarter. The demand for sophisticated memory solutions is being bolstered by the increased spending on data centers and related hardware by major technology giants like Meta Platforms and Amazon.
Expanding supply of next-generation high bandwidth memory (HBM4) chips is something Samsung aims to do this year in order to cash in on this trend. Further steps toward price stability and reduced cyclical volatility in the semiconductor market are being considered by the company through the exploration of multi-year supply agreements.
But labour unrest poses a risk to Samsung’s operations. In response to demands for a cut of the company’s yearly operational profit, its unionised employees have planned an 18-day general strike beginning May 21. Some experts worry that a protracted strike would halt production, but others think it will have little effect because semiconductors are so highly automated.
Although it is facing new labour issues, Samsung is still well positioned at the center of the AI-driven semiconductor upcycle, as seen by its solid quarterly performance.
Image Credit: Gulf News
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