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Posts 10-fold increase in Q1 operating profit

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Memory chip sales nearly double from prior year

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Operating profit highest since Q3 2022

(Updates shares in paragraph 4; adds mobile profit in final

paragraph)

By Joyce Lee and Heekyong Yang

SEOUL, April 30 (Reuters) - Samsung Electronics ( SSNLF )

said on Tuesday it expected demand for artificial

intelligence to hold strong in the second half, driving sales of

memory chips and tech devices, as it reported a more than

10-fold rise in first-quarter operating profit.

The South Korean company's memory chip sales nearly doubled

in the first quarter from a year earlier as prices rose steeply

from a severe downturn, thanks to the boom in AI.

"In the second half of 2024, business conditions are

expected to remain positive with demand - mainly around

generative AI - holding strong, despite continued volatility

relating to macroeconomic trends and geopolitical issues,"

Samsung said in a statement.

Samsung shares were up 1.6% in morning trade, outpacing a

0.5% rise in South Korea's benchmark index.

The world's biggest maker of memory chips and TVs said

operating profit rose to 6.6 trillion won ($4.8 billion) in

January-March, up from 640 billion won a year earlier.

That was in line with Samsung's own estimate of 6.6 trillion

won flagged earlier this month, its highest operating profit

since the third quarter of 2022.

First-quarter revenue rose 13% to 71.9 trillion won, the

company said, including a 96% increase in memory chip revenue to

17.49 trillion won.

It cemented a recovery from an unprecedented memory chip

downturn caused by weak post-pandemic demand for gadgets that

use chips.

MEMORY CHIP PROFIT

The chip division, historically Samsung's cash cow business

that used to make up two-thirds of the company's operating

profit, swung to profit of 1.91 trillion won in the March

quarter from a 4.58 trillion won loss a year earlier.

Samsung's memory chip business reported a profit for the

first time since the third quarter of 2022 due to customers

buying chips in anticipation prices would rise further in

future.

Prices of NAND flash chips used to store data increased by

23% to 28% during the first quarter versus the previous quarter,

while prices of DRAM chips used in tech devices rose by about

20%, according to data provider TrendForce.

South Korean rival SK Hynix said last week it

expected a full recovery in the memory chip market on AI demand

as it posted its highest profit in nearly two years.

Samsung said it began mass production this month of the

latest high bandwidth memory (HBM) chips for use in generative

AI chipsets, called 8-layer HBM3E, as it seeks to capitalise on

the AI boom that has benefited its rivals.

It said it plans to start making the 12-layer version

during the second quarter.

Samsung's mobile devices business booked a 3.51 trillion

won operating profit in the first quarter, down from 3.94

trillion won a year earlier. Rising costs, including increased

memory chip prices, dented margins from its flagship Galaxy S24

smartphones launched during the quarter.

($1 = 1,374.1900 won)