Samsung Aims to Reverse Chip Losses, Targets $8.8B Profits
Samsung, the leading global technology company, is determined to turn around its chip division’s recent losses and achieve an impressive $8.8 billion operating profit this year. In 2023, the semiconductor division reportedly suffered a staggering $10 billion loss, mainly due to a supply glut of DRAM and NAND flash memory.
To combat this challenging situation, Samsung has taken significant measures over the past year. The company has made efforts to reduce wafer input and overall inventories, resulting in visible outcomes from October to December 2023. The prices of memory chips rebounded as the supply tightened. Furthermore, Samsung is experiencing a resurgence in demand from PC and smartphone manufacturers, specifically for high bandwidth memory (HBM) and computer express link DRAMs, facilitated by the artificial intelligence (AI) boom.
Samsung’s strategic position enables it to capitalize on the memory demand driven by the AI industry. Sources indicate that buyers are willing to pay exorbitant amounts, up to $1 billion for each HBM pre-order. With a 47-47% share in the global HBM market, Samsung is well-positioned to benefit from this lucrative opportunity.
Despite these positive developments, Samsung still faces risks posed by existing inventories. The company reportedly holds over $15 billion worth of memory inventories, potentially requiring them to be sold at discounted prices as they consist of outdated models. Additionally, Samsung is expected to continue reducing NAND output to further raise prices.
The semiconductor division has long been one of Samsung’s most profitable business units, and the company is determined to restore its profitability in a spectacular fashion in 2024. The recent recovery in chip prices, coupled with the growing demand for memory chips driven by the AI boom, present a favorable environment for Samsung’s ambitious goal.
Samsung’s efforts to optimize its chip business have clearly paid off. By leveraging AI technology and adapting to market conditions, the company is poised for success. However, challenges remain, such as the need to sell outdated inventory and implement further production cuts. Nevertheless, Samsung’s persistent focus on innovation and adaptability positions it strongly within the global semiconductor market.
As the year unfolds, all eyes will be on Samsung and its journey to reverse chip losses and achieve remarkable profits. With its technological prowess and cutting-edge solutions, Samsung continues to be at the forefront of the semiconductor industry, ready to seize opportunities, navigate challenges, and shape the future of chip manufacturing.
