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Samsung sees chip recovery in 2024
PHOTO: REUTERS/FILE
REUTERS, Seoul
Samsung Electronics on Tuesday said it will continue to cut production to ease a chip supply glut, and gear up for 2024 when it expects industry-wide investment and production to focus on high-end chips for generative artificial intelligence.
Samsung has slashed chip output this year to weather an unprecedented industry downturn, and flagged further production adjustment, especially for NAND flash memory chips, as the market starts to recover.
“We’ve received purchase inquiries from (server) customers seeking to secure components ... based upon widening awareness that the industry has reached bottom,” Jaejune Kim, memory business executive vice president, said on an earnings call.
“Considering the normalisation of inventory levels, we expect market recovery to accelerate in PC and mobile memory.”
The proliferation of on-device AI functions will increase appetite for DRAM chips such as high bandwidth memory (HBM) in 2024, the world’s biggest memory chip and smartphone maker said.
“We’ve received purchase inquiries from (server) customers seeking to secure components ... based upon widening awareness that the industry has reached bottom,” Jaejune Kim, memory business executive vice president, said on an earnings call.
“Considering the normalisation of inventory levels, we expect market recovery to accelerate in PC and mobile memory.”
The proliferation of on-device AI functions will increase appetite for DRAM chips such as high bandwidth memory (HBM) in 2024, the world’s biggest memory chip and smartphone maker said.
A rebound in NAND chips is less clear as those chips are for data storage and are unrelated to AI demand. Still, analysts said continued production cuts would hasten recovery in traditional memory chips.
“The most memorable part of today’s call was Samsung’s signal that (older) legacy chips are also rebounding... We knew things are bad for NAND, and Samsung’s comment on flexible production cuts hits just the right note,” said analyst Ko Yeongmin at Daol Investment & Securities.
“Considering the production cut policy and the change in demand for legacy products, Q4 chip prices might rise slightly faster than anticipated.”IMPROVING DEMAND
Samsung reported operating profit of 2.4 trillion won ($1.78 billion) for July-September, 78 percent lower than a year prior but around a third better than the two previous quarters. Revenue fell 12 percent to 67.4 trillion won.
Loss in the memory chip business shrank to 3.75 trillion won in the third quarter, versus 4.36 trillion won in the second.
Reflecting improving chip demand, overall factory output in South Korea in September rose for a second consecutive month helped by increasing chip production.
In mobile devices, profit reached 3.3 trillion won, slightly higher than last year, on solid sales of premium foldable smartphones.
After contracting in 2022-2023, mobile demand is likely to stabilise next year, Samsung said. The firm targets double-digit growth in flagship mobile product shipments and revenue growth exceeding market growth.