Core Viewpoint - The market for specialized storage chips used in artificial intelligence is expected to grow at an annual rate of 30% over the next decade, reaching significant levels by 2030, despite ongoing price pressures in the sector [1][2]. Group 1: Market Growth and Demand - The global growth outlook for high bandwidth memory (HBM) chips is optimistic, driven by strong demand from end-users in the AI sector [1]. - Major cloud computing companies like Amazon, Microsoft, and Alphabet are anticipated to increase their AI investment spending, positively impacting the HBM market [1][2]. - SK Hynix's HBM business planning head indicated that the relationship between the number of AI devices installed and the procurement of Hynix memory is straightforward, suggesting a clear correlation [1]. Group 2: Strategic Changes in Storage Business - HBM technology, first introduced in 2013, utilizes vertical stacking of chips to save space and reduce energy consumption, which is crucial for handling large data volumes generated by complex AI applications [2]. - SK Hynix expects the customized HBM market to grow to several billion dollars by 2030, reflecting a significant strategic shift in the storage business [2]. - The company has reassured the market about future HBM demand, emphasizing that major tech companies are competing for investments in AI, which will drive long-term growth [2]. Group 3: Customization and Competition - There is an expectation that customers will seek more in-depth customization services beyond what SK Hynix currently offers, with only large clients like Nvidia receiving personalized services [3]. - SK Hynix is currently the main HBM supplier for Nvidia, while competitors like Samsung and Micron have smaller supply volumes [4]. - The introduction of customized logic chips in HBM products indicates a shift away from interchangeable products, enhancing competitive differentiation [2]. Group 4: Geopolitical and Export Dynamics - The U.S. plans to impose approximately 100% tariffs on semiconductor chips imported from countries that do not produce or plan to produce them in the U.S., but this policy will not affect Samsung and SK Hynix [4]. - South Korea's chip exports to the U.S. reached $10.7 billion last year, accounting for 7.5% of total chip exports, with projections indicating that exports to Taiwan for packaging will rise to 18% of total exports by 2024, a 127% increase from the previous year [4].

Core Viewpoint - Samsung Electronics reported a significant decline in Q2 performance, with operating profit dropping 55.8% year-on-year to 4.7 trillion KRW, primarily due to a 94% plunge in chip business profits, which fell to 400 billion KRW from 6.5 trillion KRW in the same period last year [1][6]. Financial Performance Summary - Q2 2024 sales reached 74.1 trillion KRW, a 1% increase year-on-year [4]. - Operating profit was 4.7 trillion KRW, down from 10.4 trillion KRW in the same quarter last year, marking a 55.8% decline [4]. - Net profit margin decreased to 6.9%, with gross margin falling from 40.2% to 34.2% [4]. - Return on Equity (ROE) dropped from 11% to 5%, and EBITDA margin fell to 20% [2][4]. Chip Business Challenges - The chip business faced severe setbacks, with operating profit in the Device Solutions (DS) segment plummeting 93.8% to 400 billion KRW [6]. - Revenue from the chip business decreased from 28.56 trillion KRW to 27.9 trillion KRW year-on-year [6]. - Samsung is experiencing intense competition in the storage chip market, particularly from SK Hynix, which has caught up in revenue and is leading in high-bandwidth memory (HBM) chips [6]. Mobile Business Performance - In contrast to the chip business, Samsung's mobile division showed strong performance, with operating profit rising 39% to 3.1 trillion KRW [8]. - The mobile segment's revenue reached 29.2 trillion KRW, up from 27.38 trillion KRW year-on-year, driven by strong sales of the Galaxy S25 and Galaxy A series smartphones [8]. - Samsung maintained a 19% market share in the global smartphone market by volume, largely due to the success of the Galaxy A series [8]. Future Outlook - The company anticipates a rebound in performance in the second half of the year, driven by recovery in the IT sector due to AI and robotics [6]. - Despite challenges, Samsung's foundry business is expected to improve, aided by a significant contract with Tesla for AI chip production [7]. - The overall smartphone demand is projected to slightly contract due to inflation and tariff concerns, but the high-end market is expected to see moderate growth [9].