The semiconductor division has long been one of Samsung's most profitable business units. It's been having a tough time of it recently, with the division reportedly losing $10 billion in 2023.
Samsung is looking to turn these fortunes around in spectacular fashion in 2024. The company is reportedly looking to earn 11.5 trillion won or approximately $8.8 billion in operating profit from its chip business this year. The stars are aligning for Samsung to achieve this goal.
AI is helping Samsung sell a lot of memory chips
The biggest reason why Samsung lost so much money on chips last year was the supply glut of DRAM and NAND flash memory. Samsung has made serious efforts over the past year to reduce wafer input and cut overall inventories.
The results were visible in from October to December 2023 as prices rebounded on the back of tighter supply. The company is also seeing a recovery in demand from PC and smartphone manufacturers, particularly high bandwidth memory (HBM) and computer express link DRAMs, aided by the AI boom.
Samsung is well positioned to take advantage of the memory demand that the AI boom is causing. Sources suggest that buyers are willing to pay up to $1 billion for each pre-order of HBM. Samsung has a 47-47% share in the global HBM market.
Existing inventories continue to post a risk for Samsung, though. It's reportedly sitting on over $15 billion worth of memory inventories that it may have to sell at discounted prices as they're outdated models. Samsung is also expected to continue cutting NAND output in a bid to further raise prices.
