Samsung Electronics’ semiconductor business narrowed losses in the third quarter compared to the previous quarter, thanks to increased sales of high-priced products such as high-bandwidth memory (HBM), mainly for AI chips and DDR5 DRAM chips as well as chip price increases, the company said Tuesday.

As the chip industry heads toward the end of unprecedented business challenges, Samsung said it will increase the supply of HBM chips in 2024 by at least 2.5 times more than this year in order to meet growing demand from rapidly growing AI markets.

The Korean tech giant announced it generated an operating profit of 2.43 trillion won ($1.79 billion) in the third quarter, up 1.77 trillion won from the previous quarter. Samsung said its sales were at 67.4 trillion won, up 12.3 percent quarter-on-quarter, thanks to the launch of new flagship smartphones and increased sales of premium display products.

By business segment, the Device Solutions (DS) division in charge of chip production logged 16.44 trillion won in sales and an operating loss of 3.75 trillion won, reeling in the second-quarter operating loss of 4.36 trillion won. Samsung said it was able to reduce the loss through sales expansion of high-priced chips such as HBM and DDR5.

The foundry business, which produces chips ordered by chip design companies, continued to underperform due to lowered utilization of production lines.

Revealing the business strategy for next year, Kim Jae-june, executive vice president of Samsung's DS division, said the company will increase the supply of HBM chips to meet growing AI demand.

"We plan to secure HBM supply capacity at least 2.5 times more than this year to maintain the industry's top level of supply capacity in 2024,” Kim told investors during a conference call after the earnings announcement. “We have already completed supply negotiations with major customers for the relevant quantities.”

Samsung said that while demand for chips and IT products remains weak and the global economy is uncertain, it is making steady progress in preparing for the future by expanding investment.

“Capital expenditure for the third quarter was 11.4 trillion won, with 10.2 trillion won for the DS division and 0.7 trillion won for display. We have invested a total of 36.7 trillion won through the third quarter, with 33.4 trillion won in DS and 1.6 trillion won in display,” Samsung said, adding that its annual capital expenditure is expected to be around 53.7 trillion won this year, the highest ever.

“For the memory chip business, we expect to increase the proportion of investments for the completion of Pyeongtaek Line 3 to respond to mid- to long-term demand, investment in the framework of Pyeongtaek Line 4, and R&D to strengthen our technology leadership. In particular, we are actively investing in new technologies, including investments to secure HBM production capacity at the highest production level in the industry,” Samsung added.

By: DocMemory
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