Samsung Electronics’ Second-Quarter Profit Surge Driven by AI Demand

Samsung Electronics is projected to experience a significant profit increase in the second quarter, driven by rising demand for artificial intelligence (AI) technology, which has boosted memory chip prices.

The world’s biggest producer of memory chips, smartphones, and TVs is expected to report an operating profit of 8.8 trillion won ($6.34 billion) for the quarter ending June 30.

This figure, derived from an LSEG Smart estimate of 27 analysts, represents a 13-fold increase from the operating profit of 670 billion won reported in the same period last year.

Semiconductor Division Performance:

The semiconductor division is anticipated to contribute significantly to Samsung’s improved performance.

According to a norm of forecasts from 10 analysts, the division’s estimated Q2 operating profit is 4.6 trillion won, compared to a loss of 4.36 trillion won in the same period last year.

This turnaround is attributed to rebounding memory chip prices, which had been depressed from mid-2022 to the end of 2023 due to weak post-pandemic demand for gadgets.

AI-Driven Chip Demand:

Analysts highlight the explosive demand for high-end DRAM chips, such as high-bandwidth memory (HBM) chips used in AI chipsets, data center servers, and AI-driven devices.

According to TrendForce, memory chip prices increased substantially during the second quarter, with DRAM prices rising by 13% to 18% and NAND Flash prices increasing by 15% to 20% compared to the previous quarter.

Mobile Business Challenges:

Despite maintaining similar smartphone shipment volumes, Samsung’s mobile business is expected to report a decline in Q2 operating profit due to higher parts costs and increased marketing and development expenses for AI services.

Based on forecasts from 10 analysts, the mobile business’s estimated operating profit is around 2.2 trillion won, down from 3.04 trillion won a year ago.

Upcoming Product Launches:

Looking ahead, Samsung is set to compete with Apple at the superior end of the market by launching its latest flagship foldable phones and mobile accessories, including a new health-monitoring ring, on July 10 in Paris.

This strategic move is expected to bolster Samsung’s marketplace and cater to the growing demand for innovative mobile technologies.