Samsung Electronics Co., Ltd

[Knobby22]

Profits up over 900%. Chips the main reason. Impressive company.

Samsung: Tech giant sees profits jump by more than 900%

Chip prices recover from a post-pandemic slump while demand for AI-related products booms.

www.bbc.com

 

[colly601]

Profits up over 900%. Chips the main reason. Impressive company.

Samsung: Tech giant sees profits jump by more than 900%

Chip prices recover from a post-pandemic slump while demand for AI-related products booms.

www.bbc.com

Another episode of: Oh my god why haven't I invested all my money in it before the jump

 

[frugal.rock]

He's on ignore @Joe Blow so I can't hit report...

 

[Dona Ferentes]

Platinum run a local fund focusing on Asia and has a LIC .... PAI . Some 20 per cent and their top 3 holdings are in the IT chip sector


Recent commentary from PAI - Jan ... more out in next Q update)

Global smartphone and PC shipments are expected to post a third year of decline in 2023 before recovering in 2024.
That’s good news for our longstanding positions in South Korean memory chip makers Samsung Electronics and
SK Hynix as well as leading semiconductor foundry Taiwan Semiconductor. For memory chip makers, 20-30% production cuts led by Samsung mean PC/smart-phone related inventory is now reaching normal levels. This is likely to continue well into 2024 and further drive down supplier inventory. As a result, memory pricing is now starting to stabilise and increase off a low base.

A recovery in chip markets
In November, Korean DRAM exports increased by 28% YoY, after contracting for 16 consecutive months. Future capex is now being directed at leading edge nodes, such as High-Bandwidth Memory or DDR5 modules rather than legacy capacity.

While memory demand for traditional server markets remains weak, this has been offset by strong generative AI investment by cloud service providers. The race to supply HBM to integrate with graphics processing units for generative AI applications is now on, with supply struggling to keep up with demand. A typical NVIDIA H100 GPU uses 80-100GBs of HBM3 memory. SK Hynix had taken the early lead supplying HBM3 to NVIDIA but Samsung has now also started supplying the US AI leader.

The opportunity in Generative AI continues to grow. Potential use cases are expanding out from data centres and cloud service providers to include areas such as AI-enabled PCs/smartphones and to embedded AI in automotive and industrial markets.

SK Hynix expects 100-200% HBM growth in 2024 with compound annual growth of 60-80% over the next five years. Given this positive outlook, SK Hynix is doubling capacity and Samsung expects to expand supply by 2.5x times in 2024. All the major players are also developing next generation technologies with even higher peak bandwidth and improved power consumption to match NVIDIA’s ambitious AI roadmap. While Samsung and SK Hynix have performed well this year they are still trading at fair valuations of 1.5x and 1.7x trailing book value, respectively.

TSMC is also a beneficiary from a cyclical recovery in PC/smartphone shipments given these markets represent around 50% of its revenue base. Growing replacement demand for high-end smartphones and PCs should drive strong demand for leading edge nodes. TSMC is currently ramping up capacity with a sizeable share of this capacity booked by Apple for its next generation of devices. TSMC is also the exclusive foundry for NVIDIA’s high performance GPUs and is doubling its advanced packaging capacity to alleviate this critical bottleneck.

Currently, high performance AI-related GPU represents 6% of TSMC revenue, however the company expects revenue in this segment to grow by an extraordinary 50% compound per annum over the next five years. TSMC is trading on just 15x 2024 earnings-per-share, which appears attractive for a business surfing both cyclical and structural tailwinds.