Samsung Targets AI-Driven Demand to Spur Memory Sales and Regain Growth Momentum

Amid a challenging financial period marked by decreased revenue and profit, Samsung Electronics is setting its sights on the burgeoning demand for artificial intelligence (AI) technology to boost its memory sales and drive growth. In the face of a competitive and ever-evolving tech market, the company is leveraging AI's potential to revive its semiconductor business.

A Decline in Revenue and Profit

In the fourth quarter of the fiscal year, Samsung experienced a drop in revenue, down to ₩67.78 trillion ($50.8 billion) from ₩70.5 trillion ($52.8 billion) the previous year. The company's operating profit saw a significant downturn of 34 percent year-on-year, plummeting to ₩2.82 trillion ($2.11 billion), a low not seen since 2008.

An Upward Trend in Memory Market

Despite the downturn, Samsung executives, during an earnings conference call, reported a brighter outlook as compared to the previous quarter. This optimism is attributed to a rebound in memory prices and sales of higher-end display components. The latter part of the fourth quarter, as reported by Jaejune Kim, Samsung's Executive Vice President for Memory, showed promising signs with the uptrend in memory market driven by the IT industry's increasing investment in generative AI.

The company witnessed improved orders for memory products as inventory levels normalized. Emphasizing the sale of components that command higher profit margins like HBM, DDR5, and LPDDR5X, Samsung saw its DRAM product line return to profitability. Enhanced inventory depletion rates for both DRAM and NAND products, coupled with an average selling price (ASP) increase, contributed to the profits.

The Road Ahead: Expectations and Strategies

Looking forward to the first quarter, Samsung anticipates a burgeoning sales pipeline, although a full recovery in server and storage demand may still be a few quarters away. The integration of generative AI by more technology manufacturers is believed to enhance memory profitability, with expectations of the entire memory business returning to the black.

In anticipation of the continued need for memory in commercial PCs, flagship smartphones, and server replacements, Samsung is preparing to introduce the industry's highest capacity 32 Gb DDR5 based on an advanced 1b fabrication process. The company is also gearing up for the production of next-generation HBM3E.

Beyond memory, there is cautious optimism for the smartphone market's rebound. However, Samsung acknowledges that it is yet to be determined if the recent uptick in orders will translate into substantial earnings growth for the year. Also, its Foundry Business, having endured weak demand in the fourth quarter, is expected to see an influx of orders from AI smartphone and PC launches.

With an emphasis on improving yields and perfecting its 3 nm GAA fabrication process, Samsung is also preparing for future technological demands by securing a 2nm AI accelerator order.

Artificial intelligence's influence on the semiconductor market is clear. Samsung is positioning itself to capitalize on this trend, particularly in the memory segment. Despite existing macroeconomic risks, the company is confident about the market conditions and IT demand for memory continuing to recover through the upcoming years.

Dedicated to responding to the AI semiconductor demand and establishing an early presence in markets for AI-enabled consumer products, Samsung sets forth to strengthen its leadership position in premium product segments and enhance its competitive edge in advanced node technologies.

Samsung, AI, growth