Seoul [South Korea], April 30 (ANI): Samsung Electronics, on Thursday, announced its strategy to prioritize high-value memory products, specifically high-bandwidth memory (HBM) and server chips, as supply shortages triggered by the artificial intelligence boom are expected to persist for some time.

According to a report by The Korea Herald, the tech giant reported a record-breaking first-quarter operating profit that surged 756.1 per cent to 57.23 trillion won (approx. USD 39 billion), a quarterly high driven largely by its semiconductor business. Revenue for the January-March period rose 69.2 per cent to 133.87 trillion won (approx. USD 91.2 billion).

Kim Jae-june, executive vice president of the memory division, stated during the company's earnings call that AI-related demand continues to outpace supply. He noted that customers are already securing inventory for next year to avoid potential shortages.

'Demand for next year is already being placed in advance by customers concerned about supply shortages,' the report quoted Kim. 'Based on these orders alone, the supply-demand gap next year is expected to become even more severe than this year.'

As per the report, the company is currently ramping up production of its sixth-generation HBM4 chips, which began mass shipments in February. Samsung expects these chips to dominate its revenue stream in the coming months, while also preparing to ship samples of its seventh-generation HBM4E product in the second quarter.

'HBM4 sales will account for more than half of total HBM revenue from the third quarter, and will also make up a majority for the full year,' the report quoted Kim. 'This year's HBM revenue is expected to grow more than threefold from a year earlier.'

The semiconductor division alone posted 81.7 trillion won (approx. USD 55.6 billion) in revenue and 53.7 trillion won (approx. USD 36.6 billion) in operating profit, accounting for the vast majority of the company's total earnings.

Meanwhile, the foundry business is shifting focus toward high-value specialty demand in mature processes and advanced technology. The report mentioned that the company's new plant in Taylor, Texas, recently held an equipment move-in ceremony and is positioned as a production base for the 2-nanometer process.

'We will improve the fundamentals of the business with an optimized product mix that takes profitability and investment efficiency into account,' the report quoted Kang Suk-chae, executive vice president of the foundry division.

Samsung is currently in discussions with several major customers, including Tesla, regarding 2-nanometer production. While the financial outlook remains strong, the company is also managing internal labor risks.

As per the report, Samsung's union coalition has planned a general strike from May 21 to June 7, demanding that 15 per cent of operating profit be paid out without a cap.

'Even if a strike takes place, we plan to respond as much as possible within legal boundaries through a dedicated organization and response system so that production disruptions do not occur,' the report quoted Chief Financial Officer Park Soon-cheol.

The company plans to maintain its technological lead through significant spending, with total investment in research and development and capital expenditure expected to exceed 110 trillion won (approx. USD 74.9 billion) for the first time this year. (ANI)