Samsung Sees Huge Q2 Profit Surge on Robust AI Chip Demand

South Korean tech giant Samsung Electronics Co. Ltd. on Friday expects its profit to accelerate to its fastest in the second quarter, as semiconductor demand recovered due to the strong global need for artificial intelligence (AI) technologies.

The world’s largest memory chip and smartphone maker estimated operating profit at ₩10.4 trillion ($7.54 billion) in its preliminary results for the three months ending June 30, marking a 15-fold surge from the ₩670 billion posted in the same period a year earlier.

The figure exceeded analysts’ consensus for a profit of ₩8.8 trillion. Second-quarter revenue is also seen rising about 23% to ₩74 trillion from ₩60.01 trillion the year prior, the largest increase since the pandemic highs in 2021.

The company will announce its final earnings for the second quarter, which is currently its most profitable since the third quarter of 2022, on July 31.

AI Boom Drives Recovery in Memory Chip Demand

Samsung’s solid preliminary earnings came as memory chip demand bounced back from post-pandemic declines as AI development and data centers bolstered the chip market.

Data from a Hong Kong-based market research firm showed that the AI boom helped raise semiconductor costs by 15% from a quarter earlier, aiding in the recovery of the South Korea-based company’s memory chip business.

Its chip inventory value is expected to improve as robust demand for AI servers and enterprise data storage buoyed prices for dynamic random-access memory (DRAM) and NAND chips.

A Taiwan-based tech market researcher said DRAM chip prices rose around 13% and 18% in the second quarter from the previous quarter, while prices for NAND flash chip intended for data storage climbed 15% and 20%.

Increased demand for information technology (IT) is also likely to have better the firm’s contract chipmaking operations.

Samsung previously stated that it plans to start mass-producing advanced high-bandwidth memory (HBM) chips this year, and it expects to receive more orders from US AI chip giant Nvidia Corp.

AI has shored up semiconductor demand over the past year as more companies attempted to acquire a market share from AI frontrunners such as OpenAI Inc. with their own products and services.

In addition to memory chips, the South Korean firm saw its smartphone sales receive a boost from AI following its move to integrate the technology into its Galaxy S24 series.

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