Samsung Electronics on Tuesday mentioned working revenue for the primary quarter jumped 932.8% as reminiscence chip costs rebounded on the again of AI optimism.

Listed here are Samsung’s first-quarter outcomes versus LSEG estimates:

• Income: 71.92 trillion Korean received (about $52.3 billion), vs. 71.04 trillion Korean received
• Working revenue: 6.61 trillion Korean received, vs. 5.94 trillion Korean received

Samsung’s income for the quarter ending March jumped 12.81% from a 12 months in the past, whereas working revenue soared 932.8% in the identical interval.

The figures have been in keeping with the corporate’s steerage earlier this month, the place Samsung mentioned working revenue within the January-March quarter probably rose to six.6 trillion Korean received, up 931% from a 12 months in the past. The agency anticipated first quarter income at 71 trillion received.

The South Korean electronics large noticed file losses in 2023 because the business reeled from a post-Covid hunch in demand.

“The corporate posted KRW 71.92 trillion in consolidated income on the again of sturdy gross sales of flagship Galaxy S24 smartphones and better costs for reminiscence semiconductors. Working revenue elevated to KRW 6.61 trillion because the Reminiscence Enterprise returned to revenue by addressing demand for top value-added merchandise,” Samsung Electronics mentioned in a press release on Tuesday.

Citi analysts mentioned they see upside for Samsung’s NAND flash reminiscence enterprise on account of AI computing demand. In a be aware on April 5, they reiterated their “purchase” ranking on the agency with a goal worth of 120,000 received — a 56% upside from the closing worth of 76,700 received on Monday.

NAND is one other staple reminiscence chip alongside DRAM.

“We anticipate storage (HDD) to be the subsequent bottleneck in AI computing, particularly in AI coaching, and foresee Samsung Electronics to be one of many key beneficiaries of SSD demand momentum for AI coaching,” mentioned the Citi analysts.

Samsung is the world’s largest producer of dynamic random-access reminiscence chips (DRAM), that are generally present in a variety of shopper gadgets together with smartphones and computer systems.

Samsung mentioned it expects the second quarter to be pushed principally by demand for generative AI, whereas cellular demand stays steady. In the meantime, it expects PC demand to be impacted by sluggish seasonality, which might result in clients adjusting inventories earlier than new product launches within the second half of 2024.

Samsung mentioned its semiconductor enterprise logged a 1.91 trillion Korean received in working revenue within the first quarter, as in comparison with a lack of 4.58 trillion received in the identical interval a 12 months in the past and a lack of 2.18 trillion Korean received within the fourth quarter.

“We assume the earnings shock was pushed by increased reminiscence worth hike on AI-driven sturdy upturn cycle. We anticipate the corporate will information for constructive reminiscence market outlook and emphasize its readiness in AI period together with HBM (12H HBM3E, HBM4) and foundry/packaging answer,” mentioned SK Kim of Daiwa Capital Markets in emailed feedback to CNBC on Monday, forward of the earnings launch.

As AI fashions turn out to be extra advanced and datasets turn out to be bigger, these fashions want reminiscence chips with increased capacities and quicker speeds to cater to those workloads.

Kim mentioned in an April 5 report he expects one other worth hike on reminiscence chips to drive Samsung’s second-quarter earnings on the again of an AI growth and the earthquake in Taiwan.

“Particularly, we anticipate extra upside in costs ensuing from the earthquake in Taiwan,” mentioned Kim, including that the earthquake in early April briefly impacted TSMC‘s and Micron‘s manufacturing.

To fulfill AI demand, Samsung mentioned it began mass producing HBM3E 8H and V9 NAND in April. It plans to mass produce HBM3E 12H merchandise and a 128GB product primarily based on 1b nanometer 32GB DDR5 inside the second quarter.

Regardless of macroeconomic uncertainty and geopolitical tensions, the agency expects the operational surroundings to “stay constructive with demand” – bolstered by generative AI – within the second half of the 12 months.

Samsung additionally mentioned growth of 3-nanometer and 2-nanometer processes is “progressing easily.” Samsung kicked off mass manufacturing of 3-nanometer chips in 2022 and plans to start out mass producing 2-nanometer chips in 2025.

Robust gross sales of Samsung’s newest smartphone sequence Galaxy S24 helped to elevate income and working revenue of the cellular enterprise, the agency mentioned. AI options on the S24 akin to Circle to Search have been standard amongst clients.

Nevertheless, the agency warned that smartphone demand and shipments might decline within the second quarter due to seasonality.

However the smartphone market might see a rebound within the second half of the 12 months from “stabilizing shopper sentiment, the enlargement of AI services and products, and financial progress in rising markets.”

Samsung mentioned it would proceed to broaden Galaxy AI to current and new flagship merchandise to drive additional progress.

Many international locations on the earth are racing to fabricate superior semiconductors.

Earlier this month, the Biden administration agreed to grant Samsung as much as $6.4 billion of funding to create new manufacturing capability to provide chips in Texas. Micron and TSMC are additionally poised to obtain grants to spice up chipmaking within the U.S. after many years of chip manufacturing transferring to Asia.

Samsung and TSMC are set to face competitors from Japan’s Rapidus Company, which was not too long ago granted $3.89 billion in extra subsidies from the Japanese authorities to mass produce 2-nanometer chips from 2027.

There are rising issues that Samsung Electronics dangers dropping its main place to rivals like SK Hynix, the world’s no. 2 reminiscence chip maker.

SK Hynix on March 19 mentioned it turned the primary within the business to mass produce HBM3E, the next-generation of excessive bandwidth reminiscence chips utilized in AI chipsets. SK Hynix is the first provider of HBM3 chips to Nvidia’s AI chipsets.

Mehdi Hosseini, senior tech {hardware} analyst of Susquehanna Worldwide Group, identified in early April that Samsung was the market chief in reminiscence, smartphones and show improvements.

Now, Samsung is barely “benefiting from the cycle restoration,” he added.

Within the first quarter, Samsung managed to regain the highest spot in smartphone shipments after dropping the crown to Apple in 2023, in keeping with Worldwide Information Corp.