In addition to the strong memory momentum which contributes to Samsung’s soaring profits in the second quarter, the tech giant’s progress on the foundry and chip business also attracts attention. According to its press release on July 31st, Samsung expects its foundry revenue growth to outpace the market in 2024 on the back of the full-scale mass production of second-generation 3nm GAA technology.

Earlier in May, Samsung announced the tape-out of its first 3nm mobile SoC, which used the Synopsys.ai EDA suite to verify the design. It signifies a major milestone as it is the first smartphone AP taped out with its 3nm GAA process. Before that, Samsung’s SF3E node has only been utilized for cryptocurrency mining chips.

The Korean semiconductor heavyweight now notes that the initial response to the new SoC for wearables, which features the industry’s first 3nm technology, has been favorable, and adoption of 3nm SoCs by key customers is expected to expand in the second half of the year. It also plans to ensure a stable supply of the Exynos 2500 for flagship models.

It is worth noting that another focus for Samsung in 2H24 will be the expansion for the application of 200-megapixel sensors from main wide camera to tele cameras. Samsung states it plans to expand sales of DDI products with the start of mass production of new models for a customer based in the US. According to an earlier report by The Verge, Apple may begin using Samsung camera sensors as early as 2026, ending Sony’s decade-long role as the exclusive supplier of the phone’s camera sensors.

Samsung also draws an ambitious roadmap, saying that it will expand its order intake for AI and HPC applications, targeting a fourfold increase in the customer base and a ninefold increase in sales by 2028 from the levels in 2023.

Samsung announced its financial results for the second quarter today, posting KRW 74.07 trillion in consolidated revenue and operating profit of KRW 10.44 trillion (approximately USD 7.5 billion). Its DS Division posted KRW 28.56 trillion in consolidated revenue and KRW 6.45 trillion in operating profit for the second quarter, posting a 94% and 1081% YoY growth, respectively.

Its Foundry Business saw improved earnings as a result of increased demand across applications. Due to higher orders for sub-5nm technology, the number of AI and HPC customers increased twofold from a year earlier. The Foundry Business also distributed the process development kit (PDK) for 2nm Gate-All-Around (GAA) technology to customers ahead of mass production in 2025.

On July 9^th, Samsung confirmed that it has received the first client for its 2nm process, and will provide turnkey semiconductor solutions using the 2nm process and the advanced 2.5D packaging technology Interposer-Cube S (I-Cube S) to Japanese AI company Preferred Networks.

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(Photo credit: Samsung)

According to TrendForce’s latest memory spot price trend report, neither did the DRAM nor NAND spot prices sees much momentum last week. Spot prices of DDR4 and DDR5 products didn’t show significant fluctuations as the market has not seen a demand uptick. As for NAND flash, the wave of stocking demand during July in response with the peak season in the third quarter of each year didn’t appear. Details are as follows:

DRAM Spot Price:

In the spot market, the overall trading volume has fallen further because the demand for consumer electronics has yet to rebound, and Taiwan’s spot trading was suspended for two days (from July 24th to 25th) due to a typhoon. The spot market as a whole has not seen a demand uptick compared to the previous week, and buyers are mostly waiting for further developments. Consequently, spot prices of DDR4 and DDR5 products have not shown significant fluctuations. The average spot price of the mainstream chips (i.e., DDR4 1Gx8 2666MT/s) dropped by 0.35% from US$2 last week to US$1.993 this week.

NAND Flash Spot Price:

The spot market would usually generate a wave of stocking demand during July in response with the peak season in the third quarter of each year, but has been rather sluggish this year due to the sufficient extent of inventory among end clients, as well as enervated market demand. A small number of spot traders were attempting to lower their quotations tentatively last week in the hope of revitalizing buyers’ demand, which was proven to be quite ineffective. Generally speaking, recent spot market prices have been somewhat lethargic alongside a continuous shrinkage of transactions. Spot price of 512Gb TLC wafers remains unchanged this week at US$3.253.

Apple’s latest technical document reveals that the two main AI models behind Apple Intelligence are trained using Google’s Tensor Processing Units (TPUs) instead of NVIDIA GPUs. According to a report from Commercial Times, this suggests that the demand for NVIDIA chips has outstripped supply, prompting some tech giants to seek alternatives.

Apple first introduced an AI technical document in June, briefly stating that its AI models were trained using TPUs. The latest technical document, which spans 47 pages, provides a detailed explanation of how Apple’s foundational models (AFM) and AFM servers are trained in Cloud TPU Clusters. This indicates that Apple rents cloud servers from cloud service providers to train its AI models.

In the document, Apple stated: “This system allows us to train the AFM models efficiently and scalably, including AFM-on-device, AFM-server, and larger models.”

Apple further mentioned that the on-device AFM models for iPhones and iPads are trained using a total of 2,048 TPUv5p chips, which are currently the most advanced TPU chips on the market. The AFM servers are trained using a total of 8,192 TPUv4 chips.

Google initially launched TPUs in 2015 for internal training use only and started offering TPU rental services to external clients in 2017. These TPUs are currently the most mature custom chips used for AI training. According to Google’s official website, the rental cost of their most advanced TPUs is approximately USD 2 per hour based on a three-year contract.

Though NVIDIA’s GPUs are currently dominating the high-end AI chip market, the enormous number of chips required for AI model training has led to a severe shortage. This is because major tech companies like OpenAI, Microsoft, Google, Meta, Oracle, and Tesla all use NVIDIA chips to develop their AI technologies.

Since the rise of ChatGPT at the end of 2022, which spurred the generative AI market, Silicon Valley tech giants have been racing to invest in AI research and development. In contrast, Apple has lagged behind its competitors and now has to intensify its efforts to bolster Apple Intelligence. On July 29th, Apple released a preview version of Apple Intelligence for certain devices.

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(Photo credit: NVIDIA)

Samsung Electronics announced its financial results for the second quarter today (July 31st), posting KRW 74.07 trillion in consolidated revenue and operating profit of KRW 10.44 trillion (approximately USD 7.5 billion). The memory giant’s strong performance can be contributed to favorable memory market conditions, which drove higher average sales price (ASP), while robust sales of OLED panels also contributed to the results, according to its press release.

In early July, the company estimated a 15-fold increase YoY in second-quarter operating profit, which was expected to jump 1,452 per cent to KRW 10.4 trillion in preliminary numbers for the April-June quarter, the highest since the third quarter of 2022. The actual results are in line with its earlier projection.

Samsung’s DS Division posted KRW 28.56 trillion in consolidated revenue and KRW 6.45 trillion in operating profit for the second quarter, posting a 23.4% and 2377% QoQ growth, respectively.

Strong Demand for HBM, DDR5 and Server SSDs to Extend in Second Half on AI Applications

Regarding current market conditions, Samsung notes that driven by the strong demand for HBM as well as conventional DRAM and server SSDs, the memory market as a whole continued its recovery. This increased demand is a result of the continued AI investments by cloud service providers and growing demand for AI from businesses for their on-premise servers.

However, Samsung observes that PC demand was relatively weak, while demand for mobile products remained solid on the back of increased orders from Chinese original equipment manufacturer (OEM) customers. Demand from server applications continued to be robust.

Samsung projects that in the second half of 2024, AI servers are expected to take up a larger portion of the market as major cloud service providers and enterprises expand their AI investments. As AI servers equipped with HBM also feature high content-per-box with regards to conventional DRAM and SSDs, demand is expected to remain strong across the board from HBM and DDR5 to server SSDs.

In response to the heating market demand, Samsung plans to actively expand capacity to increase the portion of HBM3e sales. High-density products will be another major focus, such as server modules based on the 1b-nm 32Gb DDR5 in server DRAM.

Samsung has already taken a big leap on HBM as its HBM3 chips are said to have been cleared by NVIDIA last week, which will initially be used exclusively in the AI giant’s H20, a less advanced GPU tailored for the Chinese market.

For NAND, the company plans to increase sales by strengthening the supply of triple-level cell (TLC) SSDs, which are still a majority portion of AI demand, and will address customer demand for quad-level cell (QLC) products, which are optimized for all applications, including server PC and mobile.

The ramping of HBM and server DRAM production and sales is likely to further constrain conventional bit supply in both DRAM and NAND, Samsung notes.

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