- Samsung Electronics expects demand for AI-powered chips to grow sharply in the second half of this year, helped by a significant boost in its Q2 operating profit.
- The company’s shares rise in early trading, reflecting the market’s positive expectations of Samsung’s growth potential in the AI chip space.
OUR TAKE
Samsung Electronics, which reported more than 15-fold growth in operating profit in the Q2, expects demand for AI-powered chips to increase significantly in the second half of the year, thanks to rising semiconductor prices fuelled by the AI boom. The company’s shares are up 0.7% in early trading, signalling the market’s positive expectations of Samsung’s growth potential in the AI chip space. Samsung expects AI servers to capture a larger market share as major cloud service providers and enterprises expand their AI investments.
-Rae Li, BTW reporter
What happened
Samsung Electronics achieves significant operating profit growth in the Q2 because of rising semiconductor prices driven by the AI boom. The company’s shares are up 0.7% in early trading, signalling the market’s positive expectations of Samsung’s growth potential in the AI chip space. Samsung expects AI servers to capture a larger share of the market as major cloud service providers and enterprises expand their AI investments. Although Samsung has yet to meet Nvidia’s standards for its fifth-generation HBM chip, its fourth-generation HBM3 chip, has been approved by Nvidia for use in the H20.
Supply of traditional PC and mobile memory chips will be limited in the second half of the year as production focuses on HBM, server DRAM and SSDs for AI applications. Smartphone shipments remains stable at 54 million units, although operating profit in the mobile devices business falls by about 81 billion in the Q2 due to higher component costs. Samsung expects overall demand for smartphones to increase in the second half of 2024 compared to the same period last year, driven by growing demand for premium products with AI features and accessories such as smartwatches. The company recently launches its flagship foldable phones and mobile accessories equipped with the latest AI features to compete with rival Apple in the premium smartphone market.
Also read: Apple turns to Google’s chips for training AI models
Also read: Qualcomm’s new chip brings 5G to budget phones under $100
Why it’s important
Samsung Electronics’ Q2 earnings report and forecast for AI chip demand in the second half of the year reveal the far-reaching impact of AI technology development on the global semiconductor market and the performance of related companies. With the rapid development of AI technology and the expansion of its application scope, the demand for high-performance computing chips has increased significantly, which not only drives the profit growth of chipmakers such as Samsung, but also foreshadows the continued prosperity of the AI chip market in the coming years. Samsung’s forecasts and performance provide investors and market analysts with important insights into future trends in the semiconductor industry, helping them make more informed investment decisions.
In addition, Samsung’s positive forecasts for the AI chip market and its progress in the field of high-performance HBM chips underscore the company’s strategic position in the global semiconductor competition. This not only indicates Samsung’s competitiveness in the AI chip market but may also propel the company to launch more advanced chip products in the future to meet the growing market demand.
