After reporting an operating loss of $3.4 billion (4.36 trillion won) in the memory chip unit in the second quarter of this year, Samsung Electronics has continued to reduce manufacturing of memory chips, including NAND flash used in smartphones and PCs.
However, the tech giant is hoping to create a more optimistic AI future by announcing that it will increase production of high-performance memory chips like high bandwidth memory (HBM) by 2024 in response to strong demand from the AI industry.
“Server demand remained weak as customers continued to adjust inventories, but demand for high-density/high-performance products stayed strong, driven by increased investments focusing on AI by major hyperscalers,” the company stated.
As the demand for high-performance memory chips, such as HBM, is expected to grow steadily, Samsung’s executive vice president of its memory division Jaejune Kim said on an earnings call today that the company would continue its memory chip production cuts, adjust for specific products, but double its capacities of high-performance memory chips.
DRAM and NAND are the two most common memory chip types used in electronics today, from mobile phones to server hardware in data centers. DRAM memory, for instance, permits more complex operations for huge language models like Open AI’s ChatGPT. Multitasking and the development of sophisticated AI applications both benefit from DRAM’s speedy data processing capabilities. NAND facilitates data storage.
The South Korean firm has said that by 2025, its foundry division will begin producing 2-nanometer components for mobile phones.
On Thursday, the corporation announced that its second-quarter 2023 operating profits had dropped to 670 billion won (about $524 million) from 14.1 trillion won a year earlier. This is better than the preliminary projection Samsung released earlier this month, which predicted a 96% drop in Q2 operating earnings to 600 billion won ($459 million).
Despite a 95% decline in operating earnings in the second quarter, Samsung Electronics anticipates a gradual recovery in worldwide demand for memory chips in the second half of this year.
According to a statement released by Samsung, “global demand is expected to gradually recover in the second half of the year, which should lead to an improvement in earnings driven by the component business.” Even if demand were to rebound, “continued macroeconomic risks could prove to be a challenge.”
Meanwhile, Samsung just yesterday made its newest smartphone models, including the Galaxy Z fold 5, flip 5, Galaxy Tap S9, and Galaxy Watch 6/Watch 6 Classic, official at the “Unpacked” international product launch event in its home nation.