Samsung Electronics (005930.KS) is projected to report a significant increase in second-quarter profit, driven by rising demand for artificial intelligence technology, which has led to a rebound in memory chip prices. The world’s largest manufacturer of memory chips, smartphones, and TVs is expected to see its operating profit soar to 8.8 trillion won ($6.34 billion) for the quarter ending June 30. This would mark a 13-fold increase from the 670 billion won profit reported in the same period last year, according to an average of 27 analysts’ estimates from LSEG SmartEstimate.
Surge in Memory Chip Demand
Samsung’s semiconductor division, a key revenue driver, likely saw continued improvement, marking its second consecutive quarterly profit. Analysts attribute this growth to a surge in demand for high-end DRAM chips, such as high-bandwidth memory chips used in AI chipsets, as well as chips for data center servers and AI-driven gadgets. This demand has underpinned a broad recovery in the chip industry, with memory chip prices rising significantly.
During the second quarter, DRAM chip prices increased by 13% to 18%, while NAND Flash chip prices rose by 15% to 20% compared to the previous quarter, according to TrendForce. Samsung’s chip division is estimated to have achieved an operating profit of 4.6 trillion won, a stark contrast to the 4.36 trillion won loss recorded in the same period last year.
Mixed Results in Mobile Business
While the semiconductor division thrived, Samsung’s mobile business faced challenges. Despite shipping a similar number of smartphones as last year, the division’s operating profit likely decreased due to higher costs for parts, marketing, and AI service development. Analysts forecast an operating profit of around 2.2 trillion won for the mobile segment, down from 3.04 trillion won a year ago.
Upcoming Product Launches
Samsung is gearing up to compete with Apple (NASDAQ:APPL) in the premium market segment with the launch of its latest flagship foldable phones and mobile accessories, including a new health-monitoring ring, scheduled for July 10 in Paris. This launch is part of Samsung’s strategy to bolster its position in the high-end market and leverage its advancements in AI technology.
Broad Industry Impact
The explosive demand for AI-related technology has been a significant factor in Samsung’s robust performance. Analysts highlight that the broader recovery in the chip industry is supported by the increasing need for advanced memory chips in various tech devices and data centers. This trend is expected to continue, providing a positive outlook for Samsung’s semiconductor division.
In summary, Samsung Electronics is set to report a remarkable increase in second-quarter profit, primarily driven by the booming AI market and rising memory chip prices. While the mobile division faces some profitability challenges, the company’s overall performance is buoyed by strong demand in the semiconductor sector and strategic product launches aimed at maintaining its competitive edge in the high-end market.
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