Samsung extends output cuts in anticipation of AI-driven recovery: Report
artificial intelligence (AI) technologies following the post-Covid economic downturn. Samsung's recent financial report showed net income surpassing expectations. The company expressed confidence that AI-related applications would fuel memory demand growth by the end of the year.
As part of its plans to capitalize on this trend, Samsung, South Korea's largest company, aims to double its capacity for producing high-bandwidth memory (HBM) by 2024. HBM is a cutting-edge technique crucial for AI training. Investors responded positively to Samsung's strategic focus on AI-related technologies, leading to a 2.7% increase in its shares in the Seoul market.
Notably, this move sets the stage for a competition with SK Hynix Inc. to develop essential tools for AI, enabling the world's two largest memory chipmakers to leverage the growing interest in AI applications since the success of OpenAI's ChatGPT in the previous year. While waiting for the AI-driven demand to take effect, both Samsung and Hynix have committed to limiting the production of NAND chips, commonly used in PCs and phones, to stabilize sliding prices amid ongoing economic uncertainties.
Sanjeev Rana, an analyst with CLSA Securities Korea Ltd., expressed optimism about the memory market, stating that the worst is likely behind them. Hynix experienced price rebounds in the second quarter, and Samsung is also expected to gain ground in the third quarter. Samsung anticipates a surge in demand for high-performance memory to support generative AI applications capable of processing substantial amounts of data.
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