Samsung says chips to recover in 2024 after best quarterly profit this year

SEOUL - Samsung Electronics on Tuesday flagged gradual demand recovery in 2024 after reporting its highest quarterly profit so far in 2023, as the battered memory chip market began showing signs of rebound from a severe downturn.

The proliferation of on-device artificial intelligence (AI) functions will increase appetite for Dram chips in premium products in 2024, the world’s biggest memory chip and smartphone maker said in a statement.

“PC and mobile demand is likely to benefit from the arrival of some replacement cycles for products” next year, it added.

The South Korean technology giant said operating profit reached 2.4 trillion won (S$2.4 billion) in the July to September period.

Although it fell 78 per cent from 10.85 trillion won a year earlier, it was much higher than the first quarter’s 640 billion won and second quarter’s 670 billion won.

Loss in the memory chip business shrank to 3.75 trillion won in the third quarter, versus a 4.36 trillion won loss in the second, as Samsung focused on more profitable advanced chips such as Dram chips used in AI, while continuing to cut production of older chips.

Manufacturers of smartphones and PCs grappling with weak consumer demand have gradually reduced chip inventories to levels low enough to resume purchases, signalling the end of an industry slump that began in 2022, analysts said.

Reflecting improving demand, some memory chip prices rebounded towards the end of the third quarter.

Cross-town rival SK Hynix last week said an AI boom is driving demand for Dram chips, while the effects of memory chipmakers’ production cuts are starting to show as clients are placing new orders and chip prices are beginning to stabilise.

Revenue fell 12 per cent to 67.4 trillion won.

Samsung’s earnings followed an announcement about new custom chips from smartphone rival Apple, in a continuation of the trend among major players towards in-house chip development. REUTERS