Samsung Electronics has forecasted a return to profit for its memory business in the first quarter. The company is confident in the continuous recovery of the memory industry, driven by the growth of the artificial intelligence (AI) market. Consequently, Samsung Electronics plans to significantly increase production of AI memory, including High Bandwidth Memory (HBM), which is experiencing surging demand. However, the company will continue the artificial production reduction initiated in April last year throughout the first half of this year.
On Jan. 31, during the fourth quarter and annual earnings conference call, Samsung Electronics expressed its expectation that the memory business will normalize in the first quarter of this year. Kim Jae-joon, vice president of Samsung Electronics’ Memory Business Division, stated, “We plan to actively respond to the demand for HBM servers and SSDs related to generative AI, focusing on improving profitability. We anticipate a return to profit for our memory business in the first quarter of this year.”
The key to the memory business’s return to profitability is attributed to high-value products like HBM and server memory. Notably, HBM sales in the fourth quarter of last year increased 3.5 times compared to the same period the previous year. Samsung Electronics plans to concentrate the capabilities of its entire semiconductor division, including the foundry and System LSI business units, on supplying custom HBM to meet customer demands.
A Samsung Electronics representative commented, “HBM bit sales are breaking records every quarter. In the fourth quarter of last year, sales increased by over 40% compared to the previous quarter and more than 3.5 times compared to the same period last year. Particularly in the fourth quarter, we secured major GPU manufacturers as our clients.” The representative further predicted, “We have supplied 8-layer sample products of our next-generation HBM3E to our clients and plan to start mass production in the first half of this year. By the second half of the year, its proportion is expected to reach about 90%.”
However, the company plans to maintain its production reduction to normalize inventory levels while increasing the production of high-value products like HBM and DDR5. This selective reduction approach is centered around HBM in line with last year’s constrained capital expenditure (CAPEX).
Vice President Kim stated, “Our goal of inventory normalization and the production adjustment approach remains unchanged. However, given the different inventory levels for each specific product in DRAM and NAND, we plan to continue selective production adjustments throughout the first half of the year, taking into account future demand and inventory levels.” He added, “DRAM inventory is expected to reach normal levels after the first quarter, and NAND will also normalize within the first half of the year, depending on demand and market conditions. We will continuously monitor market demand and inventory levels to adapt our business strategy flexibly.”
Meanwhile, Samsung Electronics invested a record-breaking 28.34 trillion won (US$21.30 billion) in R&D last year and allocated 53.1 trillion won for annual facility investments, preparing for the semiconductor boom.