Samsung Electronics on Tuesday stated working revenue for the primary quarter jumped 932.8% as reminiscence chip costs rebounded on the again of AI optimism.

Listed here are Samsung’s first-quarter outcomes versus LSEG estimates:

• Income: 71.92 trillion Korean gained (about $52.3 billion), vs. 71.04 trillion Korean gained
• Working revenue: 6.61 trillion Korean gained, vs. 5.94 trillion Korean gained

Samsung’s income for the quarter ending March jumped 12.81% from a yr in the past, whereas working revenue soared 932.8% in the identical interval.

The figures have been in keeping with the corporate’s steerage earlier this month, the place Samsung stated working revenue within the January-March quarter probably rose to six.6 trillion Korean gained, up 931% from a yr in the past. The agency anticipated first quarter income at 71 trillion gained.

The South Korean electronics large noticed document losses in 2023 because the trade reeled from a post-Covid hunch in demand.

“The corporate posted KRW 71.92 trillion in consolidated income on the again of robust gross sales of flagship Galaxy S24 smartphones and better costs for reminiscence semiconductors. Working revenue elevated to KRW 6.61 trillion because the Reminiscence Enterprise returned to revenue by addressing demand for prime value-added merchandise,” Samsung Electronics stated in a press release on Tuesday.

Citi analysts stated they see upside for Samsung’s NAND flash reminiscence enterprise on account of AI computing demand. In a be aware on April 5, they reiterated their “purchase” ranking on the agency with a goal value of 120,000 gained — a 56% upside from the closing value of 76,700 gained on Monday.

NAND is one other staple reminiscence chip alongside DRAM.

“We anticipate storage (HDD) to be the following bottleneck in AI computing, particularly in AI coaching, and foresee Samsung Electronics to be one of many key beneficiaries of SSD demand momentum for AI coaching,” stated the Citi analysts.

Samsung is the world’s largest producer of dynamic random-access reminiscence chips (DRAM), that are generally present in a variety of shopper gadgets together with smartphones and computer systems.

Samsung stated it expects the second quarter to be pushed principally by demand for generative AI, whereas cell demand stays steady. In the meantime, it expects PC demand to be impacted by gradual seasonality, which may result in prospects adjusting inventories earlier than new product launches within the second half of 2024.

Samsung stated its semiconductor enterprise logged a 1.91 trillion Korean gained in working revenue within the first quarter, as in comparison with a lack of 4.58 trillion gained in the identical interval a yr in the past and a lack of 2.18 trillion Korean gained within the fourth quarter.

“We assume the earnings shock was pushed by increased reminiscence value hike on AI-driven robust upturn cycle. We anticipate the corporate will information for constructive reminiscence market outlook and emphasize its readiness in AI period together with HBM (12H HBM3E, HBM4) and foundry/packaging resolution,” stated SK Kim of Daiwa Capital Markets in emailed feedback to CNBC on Monday, forward of the earnings launch.

As AI fashions develop into extra advanced and datasets develop into bigger, these fashions want reminiscence chips with increased capacities and quicker speeds to cater to those workloads.

Kim stated in an April 5 report he expects one other value hike on reminiscence chips to drive Samsung’s second-quarter earnings on the again of an AI increase and the earthquake in Taiwan.

“Particularly, we anticipate extra upside in costs ensuing from the earthquake in Taiwan,” stated Kim, including that the earthquake in early April briefly impacted TSMC‘s and Micron‘s manufacturing.

To satisfy AI demand, Samsung stated it began mass producing HBM3E 8H and V9 NAND in April. It plans to mass produce HBM3E 12H merchandise and a 128GB product primarily based on 1b nanometer 32GB DDR5 inside the second quarter.

Regardless of macroeconomic uncertainty and geopolitical tensions, the agency expects the operational atmosphere to “stay constructive with demand” – bolstered by generative AI – within the second half of the yr.

Samsung additionally stated improvement of 3-nanometer and 2-nanometer processes is “progressing easily.” Samsung kicked off mass manufacturing of 3-nanometer chips in 2022 and plans to begin mass producing 2-nanometer chips in 2025.

Sturdy gross sales of Samsung’s newest smartphone collection Galaxy S24 helped to raise income and working revenue of the cell enterprise, the agency stated. AI options on the S24 akin to Circle to Search have been common amongst prospects.

Nevertheless, the agency warned that smartphone demand and shipments may decline within the second quarter due to seasonality.

However the smartphone market may see a rebound within the second half of the yr from “stabilizing shopper sentiment, the growth of AI services and products, and financial development in rising markets.”

Samsung stated it can proceed to develop Galaxy AI to present and new flagship merchandise to drive additional development.

Many nations on the planet are racing to fabricate superior semiconductors.

Earlier this month, the Biden administration agreed to grant Samsung as much as $6.4 billion of funding to create new manufacturing capability to provide chips in Texas. Micron and TSMC are additionally poised to obtain grants to spice up chipmaking within the U.S. after many years of chip manufacturing transferring to Asia.

Samsung and TSMC are set to face competitors from Japan’s Rapidus Company, which was lately granted $3.89 billion in extra subsidies from the Japanese authorities to mass produce 2-nanometer chips from 2027.

There are rising considerations that Samsung Electronics dangers shedding its main place to rivals like SK Hynix, the world’s no. 2 reminiscence chip maker.

SK Hynix on March 19 stated it turned the primary within the trade to mass produce HBM3E, the next-generation of excessive bandwidth reminiscence chips utilized in AI chipsets. SK Hynix is the first provider of HBM3 chips to Nvidia’s AI chipsets.

Mehdi Hosseini, senior tech {hardware} analyst of Susquehanna Worldwide Group, identified in early April that Samsung was the market chief in reminiscence, smartphones and show improvements.

Now, Samsung is just “benefiting from the cycle restoration,” he added.

Within the first quarter, Samsung managed to regain the highest spot in smartphone shipments after shedding the crown to Apple in 2023, in response to Worldwide Knowledge Corp.