Quarterly revenue of KRW 71.92 trillion, operating profit at KRW 6.61 trillion Global IT demand and business environment expected to improve in H2 based on demand for AI applications
Quarterly revenue of KRW 71.92 trillion, operating profit at KRW 6.61 trillion
Global IT demand and business environment expected to improve in H2 based on demand for AI applications
Samsung Electronics today reported financial results for the first quarter ended March 31, 2024.
The Company posted KRW 71.92 trillion in consolidated revenue on the back of strong sales of flagship Galaxy S24 smartphones and higher prices for memory semiconductors. Operating profit increased to KRW 6.61 trillion as the Memory Business returned to profit by addressing demand for high value-added products. The Mobile eXperience (MX) Business posted higher earnings and the Visual Display and Digital Appliances businesses also recorded increased profitability.
The weakness of the Korean won against major currencies resulted in a positive impact on company-wide operating profit of about KRW 0.3 trillion compared to the previous quarter.
The Company’s total capital expenditures in the first quarter stood at KRW 11.3 trillion, including KRW 9.7 trillion for the Device Solutions (DS) Division and KRW 1.1 trillion on Samsung Display Corporation (SDC). Spending on memory was focused on facilities and packaging technologies to address demand for High Bandwidth Memory (HBM), DDR5 and other advanced products, while foundry investments were concentrated on establishing infrastructure to meet medium- to long-term demand. Display investments were mainly made in IT OLED products and flexible display technologies.
Memory Business Returns to Profit; Second Quarter Expected to Remain Solid on AI Demand
The DS Division posted KRW 23.14 trillion in consolidated revenue and KRW 1.91 trillion in operating profit for the first quarter.
For servers and storage, demand for generative AI showed solid trends, while demand for DDR5 and high-density SSDs remained strong. For PCs and mobile overall, content-per-box continued to grow for both DRAM and NAND, and demand remained robust on the back of active sell-in driven primarily by Chinese mobile OEM customers.
The Memory Business returned to profit as it achieved qualitative growth by addressing the demand across servers, storage, PC and mobile, focusing on high-value-added products such as HBM, DDR5, server SSDs and UFS 4.0., along with the increase in ASP.
Looking ahead to the second quarter, the industry is expected to remain solid, led mainly by demand for generative AI.
For servers and storage, the continuous increase in the supply of AI servers and subsequent expansion of associated cloud services will increase demand not only for HBM but also for conventional servers and storage solutions. Demand for mobile is expected to be stable in the quarter, while PC customers are predicted to be affected by slow seasonality, making them likely to adjust their inventories ahead of new product launches in the second half of the year.
The Company started mass production of HBM3E 8H this month and plans to mass produce HBM3E 12H products and a 128GB product based on 1b nanometer1 (nm) 32Gb DDR5 within the second quarter. The Company also started mass production of V9 NAND for the first time in the industry this month.
In the second half of 2024, business conditions are expected to remain positive with demand — mainly around generative AI — holding strong, despite continued volatility relating to macroeconomic trends and geopolitical issues.
For HBM, the Company will continue to increase supply in order to respond to growing demand for generative AI. In DRAM, the Company plans to accelerate 1b nanometer-based 32Gb DDR5 supply with faster ramp-up speeds and further strengthen its competitiveness in the high-density DDR5 module market. For NAND, the Company plans to enhance technology leadership by mass producing quad-level cell (QLC) for V9 in the third quarter.
