Samsung Electronics' latest financial report shows that its revenue for the third quarter of 2024 (July September) was KRW 7.910 trillion (approximately USD 57.29 billion), a month on month increase of 7% and a year-on-year increase of 17%; Operating profit of 918 trillion Korean won (approximately 6.65 billion US dollars) decreased by 12.1% month on month and increased by 277.8% year-on-year, mainly due to one-time cost expenditures, including incentive measures provided by the Equipment Solutions (DS) department, and the strengthening of the Korean won against the US dollar; Net profit of KRW 1010 trillion (approximately USD 7.32 billion) increased by 2.6% month on month and 72.9% year-on-year.

Samsung Electronics' Q3 storage revenue was 22.27 trillion Korean won (approximately 16.13 billion US dollars), a month on month increase of 2% and a year-on-year increase of 112%. Combining the first and second quarters, Samsung Electronics' storage revenue in the first three quarters reached KRW 61.5 trillion, an increase of 116.4% year-on-year compared to KRW 28.42 trillion in the same period last year. The operating profit of the DS department, where the storage business is located, was 3.86 trillion Korean won (approximately 2.8 billion US dollars), a decrease of 40.2% month on month and a year-on-year increase of 203%.

Samsung Electronics' Device Solution (DS) division, which leads the semiconductor business, has shown sluggish performance, stating that "although the demand for servers and high bandwidth memory (HBM) in the storage business remains strong, the performance has declined due to inventory adjustments from some mobile customers, increased supply of generic products from Chinese memory companies, one-time expenses, environmental impacts, and other factors.

Samsung Electronics stated that in the third quarter, there was strong demand for artificial intelligence and traditional servers due to continued investments from major data centers and technology companies. However, due to inventory adjustments by some customers, the demand in the mobile field is relatively weak, and the supply and demand situation is affected by the increase in mature process product supply in the Chinese market. In addition, Samsung Electronics actively responds to the demand for AI and server products, actively digests existing product inventory, and further improves inventory levels and product structure. Compared with the previous quarter, HBM, DDR5, and Server SSD revenue have all achieved significant growth. However, due to the reversal of inventory valuation losses compared to the previous quarter, the reduction of one-time expenses such as providing rewards, and the currency impact caused by the weakness of the US dollar, the performance has declined.

R&D investment and advanced technology

Samsung Electronics' R&D investment in the third quarter of 2024 was 8.87 trillion Korean won, an increase of 9.24% compared to the previous quarter. In terms of DRAM, Samsung Electronics plans to expand sales in the fourth quarter in conjunction with HBM production capacity, accelerate the transition of server DDR5 to 1nm, and actively increase the sales proportion of 32Gb DDR5 high-density products. In terms of NAND, we will expand sales of PCIe Gen5 based on the eighth generation (V8) and plan to mass produce QLC NAND 64TB products with high growth potential.

Market outlook

Samsung Electronics stated that although storage demand in the PC and mobile sectors may weaken in the fourth quarter, the growth in demand for artificial intelligence will remain strong. Against this backdrop, the company will focus on driving sales of high bandwidth memory (HBM) and high-density products. Samsung Electronics expects to continue its development momentum from the previous quarter in the fourth quarter, with plans to accelerate the transition of old production lines to cutting-edge nodes and complete the normalization of inventory levels and inventory combinations by the end of the year.

Looking ahead to 2025, investments in data centers and technology companies are likely to continue driving strong growth in artificial intelligence, and demand for traditional servers is expected to steadily increase in addition to AI servers. In the context of sustained macroeconomic uncertainty, Samsung Electronics will continue to focus on enhancing its competitiveness in advanced technology and strengthening its leadership position in high-end products and AI capabilities. The DS department will meet differentiated product requirements based on advanced technology and high value-added products such as HBM and server SSDs.

For DRAM, Samsung Electronics plans to expand the sales of HBM3E and the proportion of high-end products, such as DDR5 with 128GB or higher density for servers and LPDDR5X for mobile, PC, servers, etc. In terms of NAND, Samsung Electronics will actively respond to the high-density demand for QLC NAND products (including 64TB and 128TB SSDs) and consolidate its leadership position in the PCIe Gen5 market by accelerating the technology migration from V6 to V8.