Samsung, the world's second largest chipmaker, has released its earnings forecast for the first quarter of 2024. Compared to this time last year, sales are expected to increase by only 8%, but operating income is expected to improve by over 900%, from $500 million to $4.9 billion.

Unfortunately, the forecast does not elaborate on the reasons for the dramatic change in Samsung's fortunes, but there are some clues in the 2023 financial report. A significant portion of sales revenue comes from the success of Samsung's memory division, which accounts for roughly one-third of all sales.

If you take apart the inside of a typical gaming PC, you will likely see Samsung memory chips scattered throughout, including DDR6 for graphics card VRAM, DDR4 or DDR5 for system memory, and possibly NAND flash chips for SSDs. In the case of DRAM, Samsung leads the industry with a 40% market share, with competitors SK Hynix and Micron occupying second and third place, respectively.

For foundries that produce processors, the news is not as good, despite the backlog of orders. Last year it was reported that Samsung was having trouble getting its new 3nm GAA (Gate All Around) process node to work, and until it does, the money invested in R&D will not be covered by sales.

Rival TSMC, on the other hand, expects the same healthy net revenue of $18.9 billion and a large operating margin of 42% in Q1 2024. The Taiwanese chip company makes almost all of the products for AMD and Apple, most of Nvidia's products, and about 30% of the silicon wafers needed by Intel.

Against these advantages, one might think that Samsung doesn't stand a chance, but it manufactures the best display panels for game monitors, and all the AI and compute mega-processors like AMD's MI300X and Nvidia's H100 and B200 use Not to forget that they are one of the few manufacturers of HBM3, the ultra-high bandwidth memory used by all AI and compute mega-processors like AMD's MI300X and Nvidia's H100 and B200.

Later this year, we can expect to see new graphics processors from AMD, Intel, and Nvidia, some of which will probably use GDDR7, the next generation of VRAM chips. Since very few companies manufacture this type of graphics RAM, Samsung is likely to receive countless orders from Asus, Gigabyte, MSI, and others.

There is also the fact that TSMC's order book is in particularly high demand for the latest process nodes, so it is quite possible that AMD and Nvidia will turn to Samsung to manufacture their older low-end GPUs.

Whether that will happen or not is anyone's guess at this point, but it is clear that Samsung is expecting great things to happen this year, whether in memory, processors, or any of its extensive portfolio of products.

Samsung's success will be good for the chip industry because it will keep the market competitive.

Let's hope that's not wishful thinking on my part.