Samsung Electronics Co. has declared its dedication to maintaining reduced memory chip production as it foresees a sales resurgence in the latter half of the year. The company credits the anticipated recovery to a rise in global tech spending, primarily fueled by the growing demand for artificial intelligence (AI) technologies in the aftermath of the Covid-induced economic downturn.
The technology industry has always been characterized by its fast-paced nature and constant evolution. Companies like Samsung are no strangers to this dynamic environment, having consistently navigated through various challenges and opportunities over the years. As AI technologies continue to mature and gain prominence, the industry is on the cusp of a transformational phase. Embracing this shift, Samsung has opted to reduce its output temporarily, making way for a future that hinges on artificial intelligence.
The decision to extend output cuts might raise eyebrows at first glance. However, it is a strategic move rooted in careful analysis and foresight. By cutting back on current production, Samsung aims to optimize resources and channel its efforts towards research, development, and implementation of AI-driven solutions. This includes exploring new AI-based products and services that cater to evolving consumer demands and preferences.
Samsung’s emphasis on AI-related technologies received a favorable response from investors, resulting in a 2.7% surge in its shares in the Seoul market. This strategic direction paves the way for a head-to-head competition with SK Hynix Inc. in the development of crucial AI tools. As the two biggest memory chip manufacturers globally, they are now positioned to capitalize on the increasing demand for AI applications, which has been further amplified following the success of OpenAI’s ChatGPT in the previous year.
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 is now actively trying to increase its orders for AI-supporting chips and is also expanding its foundry business, though it currently lags behind Taiwan Semiconductor Manufacturing Co. More than 90% of Samsung’s quarterly capital expenditure of 14.5 trillion won was allocated to chips.
