Samsung's semiconductor division reported record profits in the first quarter, exceeding expert expectations, according to Bloomberg.
The 48-fold increase is driven by high margins on AI infrastructure and data center equipment. The company's operating profit—rivaling SK Hynix and Micron Technology—reached 53.7 trillion won ($36 billion), while analysts had anticipated 35.3 trillion won.
The results reflect significant spending by hyperscalers to support AI operations. Meta and Alphabet have planned to increase capital expenditures.
Some investors believe that high-bandwidth memory has moved beyond traditional cycles of boom and bust and is capable of showing stable growth.
“The pressing question is duration: how long will HBM4 maintain pricing power, and will infrastructure spending remain sustainable?” said Dave Mazza, CEO of Roundhill Investments.
Samsung plans to significantly increase capital investments this year and is preparing for the release of HBM4e—next-generation memory chips for AI.
“The company has limited inventory that does not meet customer demand,” stated one of the firm's executives.
Expected profits from Samsung, SK Hynix, and TSMC. Source: Bloomberg.
The performance of Nvidia's accelerators is limited by the speed and capacity of the memory providing data. As a result, DRAM becomes a key factor in the quality of AI services.
Cloud service providers are paying more for increasingly expensive memory, which is reflected in Samsung's stock: shares have risen 88% this year after doubling last year.
Memory Prices Will Continue to Rise
Analysts believe that Samsung's chip division will set profit records in the coming quarters, as contract prices continue to rise amid limited supply. They point to a more than 180% increase in semiconductor exports from Korea in the first 20 days of April as evidence.
Analyst Tom Kan from Counterpoint Research forecasts a 60% increase in DRAM prices this quarter compared to the previous one. From February to March, prices already rose by 42%.
Recall that Samsung is considering transitioning to multi-year contracts for memory chip supplies.