Samsung Electronics has announced a major intensification of its output of advanced chips following a record-high performance in its memory business. The company recorded a memory-chip revenue of approximately 26.7 trillion won in the most recent quarter, up from 22.3 trillion won a year earlier and driving an 80 per cent jump in operating profit for the chip segment. Recognising a sharp uptick in demand—especially for high-bandwidth memory (HBM) and other components tied to artificial-intelligence infrastructure—the South Korean firm said it intends to scale production of its most advanced offerings and substantially boost capital expenditure next year.

An executive at Samsung’s memory business went so far as to say that customer demand for the next year is expected to exceed supply, even with the planned expansions. With the artificial-intelligence build-out accelerating globally, the company’s pivot implies that Samsung sees the current cycle as more than just a memory rebound—it views it as an opportunity to advance into more complex, high-value chip categories and regain competitive momentum.

The Global Chip Market: A Broad Expansion Across Segments

The global semiconductor market is in the midst of a substantial expansion. Analysts project that the industry, which was valued at around US $681 billion in 2024, could grow to over US $2 trillion by 2032—implying a compound annual growth rate of about 15 per cent between 2025 and 2032. The key growth drivers are artificial-intelligence workloads, data-centre infrastructure build-outs, automotive electrification and advanced networking.

In the shorter term, market research firms expect chip revenue growth of about 11 to 12 per cent in 2025 and similar figures in 2026. Aided by the transition to advanced process nodes, new memory architectures, and packaging innovations, the expansion is less about traditional consumer PCs and mobile devices and more about high-performance compute, specialised memory and domain-specific accelerators. Despite lingering concerns over oversupply in some segments and weakening demand for legacy devices, this new “super cycle” narrative hinges on memory chips tailored for AI, logic chips for data-centre acceleration, and increasing chip demand from vehicles, industrial systems and network infrastructure.

Why Chip Demand Is Growing Rapidly

Several forces are converging to boost global chip consumption:

First, the growth of artificial intelligence and machine-learning workloads is driving demand for both logic and memory chips with high bandwidth and low latency. As companies invest in server farms, GPU clusters and specialised accelerators, the memory supporting those systems—such as HBM, GDDR, and specialised DRAM—is becoming highly sought-after. Samsung’s emphasis on ramping HBM output is a direct response to this trend.

Second, automotive electronics are increasingly complex. Modern electric vehicles, advanced driver assistance systems and autonomous functions require large arrays of sensors, processors, memory and connectivity chips. For example, automotive and industrial applications now account for double-digit percentages of semiconductor demand.

Third, the rollout of 5G and beyond, Internet-of-Things deployments, and edge computing are pushing chip use into new domains beyond traditional consumer devices. Memory and logic chips fuel everything from data centres to networking equipment to smart sensors.

Fourth, structural supply-chain shifts are increasing investment in capacity. Governments and firms are pouring billions into new fabrication plants, packaging facilities and memory production to meet expected future demand. The anticipation of a supply crunch or bottleneck also encourages pre-emptive investment.

Together, these factors transform chip demand from being cyclical (as in prior PC/phone cycles) into being more structural and multi-industry. Samsung’s decision to beef up advanced chip output rests squarely on these global dynamics.

Samsung’s Competitive Landscape: How Rivals Are Performing

While Samsung is stepping up its advanced chip output, the competitive landscape remains intense. SK Hynix has also declared bullish expectations, saying that the memory super-cycle driven by AI will persist and that much of its production is already pre-committed. It emphasises the need to fulfil demand for HBM and next-generation memory.

In the foundry and logic space, Taiwan Semiconductor Manufacturing Company (TSMC) remains dominant in advanced nodes and packaging, capturing over 70 per cent of the global foundry market in recent quarters. Though Samsung’s foundry business is growing, it still lags far behind TSMC’s scale and leadership in factored advanced logic.

Simultaneously, other players such as Intel Corporation and various specialist memory or logic suppliers are also ramping investment, but face heavy capital-cost challenges and technological hurdles.

For Samsung, the strategy appears to focus not just on memory but on moving “up-the-stack” into high-margin HBM4 production, samples of which are reportedly already with key clients. By mass producing HBM4 and expanding bit production in 2026 and beyond, Samsung aims to narrow the gap with rivals, while relying on strong memory demand to fund the transition.

Which Industries Are Driving Chip Consumption

Chips are now everywhere. Data centres and cloud providers require high-performance memory and logic to fuel AI models and support edge-compute growth. Networking equipment makers require advanced silicon to handle increased data traffic and 5G/6G rollout. Automotive manufacturers are adding thousands of chips per vehicle for electrification, connectivity and autonomous features. Industrial automation and the Internet of Things also represent growing recipients of chips—smart factories, robotics, renewable-energy systems and sensor networks all use semiconductors.

According to industry stats, automotive and industrial end-markets combined account for a significant slice of semiconductor consumption, while consumer electronics (smartphones, PCs) remain important but are not the growth engines they once were. In other words, the rising volume of memory and logic chips is less about selling more phones and more about enabling entirely new functions across devices, machines and networks.

Samsung’s memory business resurgence is tightly linked to these end-markets: high-bandwidth memory is increasingly used in AI-accelerator modules and servers, making it a strategic bridge between memory supply and emerging compute architectures.

Forecasts and What to Watch Going Forward

Looking ahead, the semiconductor industry is projected to reach over US $1 trillion by 2030, with some forecasts citing growth to around US $2 trillion by 2032. While the memory segment may face cyclical downturns, the advanced chip domain—particularly HBM, AI accelerators, logic nodes below 5 nm, advanced packaging—is expected to display more consistent demand. Samsung’s announcement signals its belief that the present momentum is the opening phase of a larger cycle.

Key watching points include whether supply expansion (fabs, packaging, memory capacity) keeps pace with demand without triggering excess capacity; how pricing for memory and advanced logic evolves; how quickly customers switch to new architectures like HBM4 or 3D memory; and how competition from foundries or memory rivals shifts margins. Other factors include geopolitical supply-chain risks, raw-material bottlenecks, and sustainability pressures (energy use, water consumption, etc.).

Samsung’s ability to execute on its expansion plans and justify investment in HBM4 mass production will be a critical test of whether it can convert its memory resurgence into longer-term leadership across more advanced chip segments. As the global computing landscape evolves, the firms that succeed will be those able to supply not just more chips, but the right chips for increasingly demanding applications.

(Adapted from MoneyControl.com)