AI Frenzy Boosts Samsung Q2 Profit 13-Fold


Samsung Electronics (005930.KS) is set to report a staggering 13-fold increase in second-quarter profit, driven by soaring demand for artificial intelligence technology, which has significantly boosted memory chip prices. The world’s largest manufacturer of memory chips, smartphones, and TVs is expected to post an operating profit of 8.8 trillion won ($6.34 billion) for the quarter ending June 30, according to an LSEG SmartEstimate average from 27 analysts. This would mark Samsung’s highest profit since Q3 2022, compared to an operating profit of 670 billion won in the same quarter last year.

Semiconductor Division Performance

Samsung’s semiconductor division, a key component of its business, is projected to show continued improvement with its second consecutive quarterly profit. The division’s estimated Q2 operating profit is 4.6 trillion won, based on the average forecast from 10 analysts, a significant turnaround from a 4.36 trillion won loss in the same period last year. The rebound in memory chip prices, particularly high-end DRAM and NAND Flash chips, has been a major contributor to this recovery.

Analysts attribute the strong performance to the explosive demand for high-end DRAM chips, such as high-bandwidth memory chips used in AI chipsets, as well as chips utilized in data center servers and AI-powered devices. During Q2, memory chip prices surged by approximately 13% to 18% for DRAM chips and 15% to 20% for NAND Flash chips, according to data from TrendForce.

Mobile Division Outlook

Despite shipping a similar number of smartphones, Samsung’s mobile business is expected to report a decrease in operating profit for Q2 due to higher costs associated with parts, marketing, and AI service development. The mobile division’s operating profit is projected to be around 2.2 trillion won, down from 3.04 trillion won a year ago, based on the average forecasts from 10 analysts.

Samsung aims to compete with Apple (NASDAQ:APPL) at the high end of the market with the upcoming launch of its latest flagship foldable phones and mobile accessories, including a new health-monitoring ring, scheduled for July 10 in Paris.

Market Recovery and Future Prospects

The overall recovery in the chip industry is underpinned by the surging demand for AI technologies, which is expected to continue driving growth for Samsung. The increasing reliance on AI services and the need for more advanced technology in data centers and tech devices are likely to sustain the upward trend in memory chip prices.

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