Samsung Electronics' Kyung Kye-hyun: "We missed the early AI market, but must win the second round"

Remarks at In-House Management Status Briefing
"A New World Opens with AI... Let's Create a Turning Point"
"No Growth, No Survival... We Must Achieve a Turnaround"

Kyung Kye-hyun, President of Samsung Electronics' Device Solutions (DS) Division, said, "We did not win in the early AI market," adding, "We must win the second round. If we consolidate our capabilities well, we can definitely achieve it."

According to industry sources on the 1st, Kyung recently stated at an internal management briefing for employees, "A new world represented by AI has begun to open, and now is the optimal time to create a turning point. I hope we can all make this year a turning point for new growth."

Kyung Kye-hyun, President of Samsung Electronics Device Solutions (DS) Division [Image source=Yonhap News]

Samsung Electronics recorded consolidated sales of 71.9156 trillion KRW in the first quarter of this year, a 12.82% increase compared to the same period last year, marking the second-highest quarterly sales record ever. Operating profit (consolidated) reached 6.606 trillion KRW, a 931.87% increase year-on-year. In the semiconductor business, a core area for Samsung Electronics, the expansion of the AI market increased demand for high-performance and high-capacity memory semiconductors, resulting in operating profits of 1.91 trillion KRW and a return to profitability after five quarters.

Kyung said, "Thanks to everyone's efforts despite the difficult environment, we succeeded in turning a profit," emphasizing, "Our goal is to surpass the 2022 sales." Samsung Electronics' sales in 2022 were 302.23 trillion KRW, with the DS Division, responsible for the semiconductor business, accounting for approximately 98.46 trillion KRW.

Kyung stated, "Growth is more important than just making profits," adding, "Since 2017, the market shares of DRAM, NAND, foundry, and application processors (APs?the semiconductors that act as the brain of smartphones) have been declining, which is a major crisis for the business." According to Taiwanese market research firm TrendForce, Samsung Electronics' foundry market share in Q4 last year was 11.3%, and the gap with the No. 1 TSMC (61.2%) widened from 45.5 percentage points in Q3 to 49.9 percentage points. Last year, Samsung lost the top semiconductor supplier sales position to Intel and also lost leadership in the high-bandwidth memory (HBM) market to SK Hynix.

Kyung warned, "Companies that do not grow cannot survive," and urged, "A new opportunity is beginning. We must not miss this chance and must achieve a turnaround this year." Samsung Electronics began mass production of the 8-stack HBM3E, the 5th generation of HBM, last month and plans to mass-produce the industry’s first 12-stack HBM3E product in the second quarter. Samples of the 12-stack product are currently being supplied to customers.

Kyung emphasized that Samsung Electronics is the "only comprehensive semiconductor company" capable of turnkey supply of customized AI semiconductors. He said, "B2B business using AI is about to become a reality. Before that, energy consumption must be minimized, memory capacity must continue to increase, and data processing speed must be much more efficient. Our company can solve these issues best."

Earlier, Kyung revealed at the regular shareholders' meeting held on March 20 that Samsung is developing the 'Maha-1,' an AI chip for large language models (LLM) that can resolve memory bottlenecks.