Samsung Electronics continues to reduce its memory chip production, including NAND flash utilized in smartphones and PCs, after reporting a $3.4 billion (4.36 trillion won) operating loss within the second quarter of this 12 months in its memory chip unit. The world’s biggest memory chip maker posted a roughly $7 billion operating loss in its semiconductor business for the last six months. 

The move comes after Samsung slashed its memory chip production in April after hitting the worst quarterly profits since 2009 as demand for consumer devices remained weak.  

The tech giant, nonetheless, is aiming to generate a brighter AI picture for the longer term: it said that it plans to double down on producing high-performance memory chips like high bandwidth memory (HBM) by 2024 resulting from robust AI demand. HBM, utilized in AI, 5G, the Web of Things (IoT) and graphic processing applications, provides faster data processing and lower power consumption in comparison with the normal NAND. 

“Server demand remained weak as customers continued to regulate inventories, but demand for high-density/high-performance products stayed strong, driven by increased investments specializing in AI by major hyperscalers,” the corporate said.

On an earnings call today, the chief vice chairman of Samsung’s memory division Jaejune Kim said it might proceed its memory chip production cuts, adjust for specific products, but will double its capacities of high-performance memory chips, including HBM, because the demand for those advanced memory chips is anticipated to grow continually. 

Two primary memory chips — DRAM and NAND — are utilized in devices from smartphones to servers at data centers. For instance, DRAM memory enables large language models, including Open AI’s ChatGPT, to perform more advanced functions. DRAM also helps speed up process data for multitasking and constructing complex AI applications. NAND helps store data. 

Samsung laid out its plan for the foundry business to introduce 2-nanometer production for cell phone parts by 2025. 

The firm reported Thursday its companywide operating profits of 670 billion won (roughly $524 million) within the second quarter of 2023, down from 14.1 trillion won a 12 months earlier. The figure is best than expected than Samsung’s preliminary report issued earlier this month, estimating its Q2 operating profits would likely be a 96% plunge, 600 billion won ($459 million).

Despite operating profits dropping 95% within the second quarter, Samsung expects global demand for memory chips to rebound regularly within the second half of this 12 months. 

“Global demand is anticipated to regularly get better within the second half of the 12 months, which should result in an improvement in earnings driven by the component business, ” Samsung said in a press release. “Nevertheless, continued macroeconomic risks could prove to be a challenge in such recovery in demand.”  

Just yesterday, Samsung unveiled its latest device models — Galaxy Z fold 5, flip 5, Galaxy Tap S9 and Galaxy Watch 6/ Watch 6 Classic — on the “Unpacked” international product launch event in its home country for the primary time.