Samsung Electronics warns: soaring memory prices will impact smartphone and PC shipments, contract manufacturing business expected to turn losses around.

Samsung Electronics said on Wednesday that it expects strong demand for chips to continue this year, driven by the global artificial intelligence wave, but rising memory chip prices could impact shipments of computers and smartphones. Samsung Electronics Vice Chairman and Co-CEO Kim Ki-nam, who is in charge of the chip business, said at the annual shareholders' meeting, "Due to the growth in artificial intelligence demand and the resulting ongoing memory supply shortage, we expect the business environment to become favorable." "However, risks still exist, including uncertainty in the global macroeconomic environment, such as tariff issues and cost burdens in finished goods business (including TVs, smartphones, and home appliances)." With strong demand for artificial intelligence data center operations, a global semiconductor supply bottleneck has limited memory chip supplies for industries ranging from automotive to computers to smartphones. So far this year, Samsung's stock price has surged to record highs, rising 62% since January, outperforming the 34% increase in the Korean market index, much to the delight of shareholders. This performance is mainly attributed to the global memory chip shortage, which has allowed Samsung and its competitors (including SK Hynix and Micron) to significantly raise prices. These three companies dominate the global memory chip production. At last year's shareholders' meeting, Kim Ki-nam apologized for Samsung initially missing out on the artificial intelligence chip market opportunity, which led to a decline in stock price and profits; at that time, he tried to pacify disappointed shareholders. However, since then, the situation has improved. Following a major surge on Tuesday, Samsung's stock price rose by 5.3% on Wednesday. Previously, NVIDIA CEO Jensen Huang stated that the South Korean company is producing NVIDIA's new artificial intelligence chip. Analysts say Huang's remarks have sparked expectations in the market for Samsung's contract manufacturing department. The department manufactures logic chips for Tesla, Apple, and Samsung's mobile division, and after experiencing losses of billions of dollars in recent years, it is expected to return to profitability as early as next year. "It couldn't be better," said shareholder Oh Bong-gyu, referring to Samsung's stock market rebound before the meeting on Wednesday, "but I am a bit concerned about Samsung's union and the burden it brings to management." Due to increasing discontent among employees over wage gaps with major competitors, the Samsung union has threatened to interrupt chip production, with its members voting on a strike plan scheduled for May. Kim Ki-nam acknowledged that due to the low chip revenue, performance-based pay has decreased, causing Samsung to lag behind its competitors in terms of wage competitiveness. He said, "However, as we have regained the competitiveness of our semiconductor products since last year, the distribution of performance bonuses is showing signs of recovery, and we expect the wage competitiveness gap to narrow."