- 15-fold increase in Q2 operating profit reported by Samsung Electronics.
- Rising chip prices and AI demand boost earnings.
OUR TAKE
The recent surge in Samsung’s profits, driven by the AI boom, reflects a broader trend of technological integration reshaping industries. This development is both exciting and a reminder of the relentless pace of innovation that continues to shape our world. While the economic benefits are clear, it’s essential to remain vigilant about the ethical and societal impacts of such rapid technological change.
–Doris Du, BTW reporter
Samsung Electronics has announced a staggering more than 15-fold increase in its second-quarter operating profit in Seoul on July 5 – driven by the surging demand for semiconductors fuelled by the AI boom.
What happened
The world’s leading memory chip, smartphone, and TV manufacturer estimated its operating profit reached 10.4 trillion won ($7.54 billion) for the quarter ending June 30, a significant rise from 670 billion won a year earlier. This profit exceeded the 8.8 trillion won forecasted by LSEG SmartEstimate, making it the most profitable quarter for Samsung since Q3 2022.
Revenue for the quarter likely rose by 23% compared to the same period last year, reaching 74 trillion won, as reported by Samsung. Following this announcement, Samsung shares opened up 1.2%, outperforming the broader market’s 0.4% rise.
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Why it’s important
Samsung’s profit surge highlights the impact of the increasing demand for high-end DRAM chips, used in AI chipsets and data centre servers. During Q2, memory chip prices saw a notable increase, with DRAM prices rising by 13% to 18% and NAND Flash chips by 15% to 20%, according to TrendForce.
However, analysts caution that the pace of memory chip price growth may slow in Q3, predicting a more modest 5% to 10% rise. The demand for older legacy chips remains weak, raising questions about the longevity of the current chip industry recovery. Analysts like Ko Yeongmin from Daol Investment & Securities are keen to hear Samsung’s outlook on legacy chips in its upcoming earnings call.
The AI-driven demand for high-end chips is expected to continue outperforming the broader market, despite Samsung lagging behind SK Hynix in supplying high-end HBM chips to key customers like Nvidia. The market is also watching to see if Samsung’s latest fourth-generation HBM chips will pass Nvidia’s approval after previous issues with heat and power consumption.
A personal perspective
Samsung’s profit rise is a testament to the transformative power of AI in the tech industry. The rapid increase in demand for high-performance chips underscores the accelerating integration of AI in our daily lives, from smartphones to data centres. It’s a clear signal that AI is not just a buzzword but a driving force behind significant economic shifts.
