Samsung’s Q2 Profit Skyrockets 13-Fold Amid AI Frenzy!

  • Editor
  • July 5, 2024
    Updated
AI-Boom-Propels-Samsungs-Q2-Profit-to-Soar-13-Fold.

Key Takeaways

  • Samsung Electronics is expected to report a 15-fold increase in operating profit for Q2 2024, driven by strong demand for AI technology and memory chips.
  • The company’s shares have surged to their highest level since January 2021, reflecting investor confidence in its AI-driven growth.
  • Despite delays in high-bandwidth memory (HBM) chip qualifications, Samsung benefits from its leading market share and increased memory chip prices.
  • The forthcoming detailed Q2 results will provide further insights into Samsung’s performance and future prospects.

Samsung Electronics Co. Ltd. is poised to announce a record-breaking surge in quarterly profits, driven by unprecedented demand for artificial intelligence (AI) technology, which has boosted the prices and sales of its memory chips.

This remarkable turnaround marks a considerable recovery for the world’s largest memory chip maker, smartphone manufacturer, and TV producer.

With this news going online, this is what people worldwide have to say about it!

Profit Surge and Stock Performance

Samsung expects to report an operating profit of approximately 10.4 trillion won ($7.54 billion) for the second quarter of 2024, a staggering 15-fold increase from 670 billion won in the same period last year.

Following the profit guidance announcement, Samsung’s shares soared to their highest level in over three years, climbing by 2.24% to 86,500 Korean won ($62.73) in early trading on Friday.

The company projects its revenue to be between 73 trillion to 75 trillion won, up from 60.01 trillion won a year ago, aligning with analysts’ expectations.

AI-Driven Demand and Market Dynamics

The surge in profits is largely attributed to the skyrocketing demand for high-bandwidth memory (HBM) chips used in AI applications, data center servers, and advanced consumer gadgets.

This demand has driven up memory chip prices by 13% to 18% for DRAM and 15% to 20% for NAND Flash chips.

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The broader semiconductor market has seen a significant uptick, with enterprises and tech giants like Google, Amazon, Microsoft, and Meta scrambling to secure memory chips for AI workloads.

This has resulted in substantial price increases and boosted the profitability of memory chipmakers.

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Challenges in Mobile Division

Despite the overall positive outlook, Samsung’s mobile division faced challenges, with an expected decline in operating profit to 2.2 trillion won, down from 3.04 trillion won a year ago, due to rising component costs and increased spending on AI-related features.

Samsung is gearing up for a product launch event in Paris on July 10, where it is expected to unveil its latest flagship foldable smartphones and new health-monitoring devices.

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Industry Impact and AI Boom

The revival in memory chip prices has benefited Samsung and its competitors like SK Hynix and Micron Technologies, reflecting a broader recovery in the semiconductor industry post-pandemic.

The AI boom has led to increased investments and advancements in chip technology, positioning Samsung and other chipmakers at the forefront of this technological revolution.

Analyst Insights and Future Prospects

Analysts highlight that the profit surge underscores Samsung’s strategic investments in AI and advanced memory technologies despite delays in certain high-bandwidth memory chip qualifications.

With the continuous rise in AI applications and data-intensive technologies, Samsung’s focus on expanding its AI-driven product portfolio is expected to sustain its growth trajectory.

Recent Performance and Future Expectations

On Friday, Samsung expects operating profit for the April to June quarter to be approximately 10.4 trillion won, which is about a 1,452.2% rise from 670 billion won a year ago. The expected operating profit beat an LSEG estimate of 8.51 trillion won.

Business for the world’s largest memory chip maker rebounded as memory chip prices recovered on AI optimism last year. The South Korean electronics giant saw record losses in 2023 as the industry reeled from a post-Covid slump in demand for memory chips and electronics.

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Generative AI and Product Strategy

Samsung has gone big on generative AI with its Galaxy S24 Ultra smartphone, which comes with AI-powered features for editing photos and searching for items online.

“Samsung announces earnings surprise, but the main upside is the memory price, which is high. So, ironically, Samsung is lagging behind in HBM (high-bandwidth memory) production. So supply to Nvidia –the qualification – has been delayed,” SK Kim, executive director of Daiwa Capital Markets, told CNBC’s “Street Signs Asia” on Friday.

“But despite the delay, the company announces earning surprise is driven by the memory price high,” said Kim. “So although they are delayed in the HBM – most advanced memory product – they enjoy the benefit from their number one capacity, market share so they maximize the profit with a higher ASP (average selling price).”

Samsung Electronics’ remarkable profit surge in the second quarter of 2024, driven by explosive demand for AI technology and memory chips, marks a huge milestone in the company’s recovery and underscores the transformative impact of AI on the semiconductor industry.

For more news and insights, visit AI News on our website.

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Dave Andre

Editor

Digital marketing enthusiast by day, nature wanderer by dusk. Dave Andre blends two decades of AI and SaaS expertise into impactful strategies for SMEs. His weekends? Lost in books on tech trends and rejuvenating on scenic trails.

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