Samsung Electronics Co. Ltd. today released preliminary financial results for the first quarter, revealing that its operating profit likely jumped nearly tenfold from a year earlier.

The earnings surge comes amid rumors that the company is planning a major expansion of its chip production infrastructure. Three years ago, Samsung started building a new processor fab in Taylor, Texas. The Wall Street Journal reported today that the company intends to launch a second fab nearby along with several other semiconductor facilities.

Samsung estimates that its revenue climbed 11.4% year-over-year, to 71 trillion won, or $53 billion, in the first quarter ended March 31. The company believes that its operating profit surged 931% in the same time frame to reach 6.6 trillion won, the equivalent of $4.89 billion. The LSEG consensus estimate projected an operating profit of 5.24 trillion won.

It’s believed Samsung’s chip business was a major contributor to the profit jump. Analysts cited by the Financial Times estimate that the unit generated an operating profit of about 900 billion won, or $670 million, in the first quarter, compared with a 2.2 trillion won operating loss a year earlier.

Samsung is the world’s largest maker of flash and DRAM chips. The price of both technologies has reportedly started climbing in recent months, ending a long-running demand slump that weighed on the earnings of Samsung and its rivals last year. Increased memory prices translate into higher profit margins for suppliers.

One contributor to the memory market’s recovery is the fast-growing demand for artificial intelligence chips. Many data center AI chips include HBM memory, a type of RAM that can move data to and from the processor to which it’s attached faster than standard DRAM. That makes it well-suited for powering AI models, which shuffle data and from RAM more frequently than many other workloads.

Micron Technology Inc., one of Samsung’s top rivals in the memory market, recently disclosed that it has already sold all the HBM chips it plans to ship this year. Most of its 2025 supply is allocated as well. Micron provides HBM modules for, among other products, Nvidia Corp.’s data center chips.

Samsung likewise makes HBM modules. Additionally, the electronics giant manufactures processors for both its own devices and other companies’ products.

Samsung is currently building a new fab in Taylor, Texas, thats expected to make processors based on four-nanometer technology. The company allocated $17 billion to the project when it was announced in 2021. Last March, sources told Reuters that the projected price tag is now $25 billion, more than half of which has already been spent.

The Wall Street Journal reported today that Samsung now plans to increase its investment in Taylor once again. 

According to the paper’s sources, the company hopes to construct another new chip plant near the fab it’s currently building. Samsung is also expected to open a research and development facility, as well as an advanced packaging factory. Advanced packaging is the technology that chipmakers use to link together multiple compute modules, or chiplets, into a single processor.

It’s believed the additional facilities will boost the total value of Samsung’s investment in Taylor to about $44 billion. Last month, Bloomberg reported that the company is poised to receive more than $6 billion in federal funding for the project. The financing will be provided under the 2022 CHIPS and Science Act, which allocates $39 billion in direct grants for the chip sector along with $75 billion worth of loans and loan guarantees. 

Photo: Samsung