Samsung Electronics has forecasted a massive surge in its second-quarter profits for 2024, driven by an unprecedented demand for artificial intelligence (AI) chips.
The South Korean tech giant expects its profits for the period to increase 15-fold compared to the same time last year, indicating the significant impact of AI technology on the semiconductor market (via The Korea Times).
Samsung Sees Unprecedented Growth Thanks to AI Chips
Samsung, the world's largest producer of memory chips, smartphones, and televisions, anticipates its operating profit for Q2 to rise to 10.4 trillion won ($7.54 billion), a dramatic increase from 670 billion won in the same period last year.
This forecast not only exceeds the average analyst estimate of 8.8 trillion won but also marks a significant milestone, as the company has not posted such high profits since the third quarter of 2022.
The company's revenue for the April-June period is expected to increase by 23.3% to 74 trillion won. This remarkable growth has been attributed to a prolonged boom in AI computing, which has driven up the prices of memory chips substantially.
Impact of AI Boom
"Right now, we are seeing skyrocketing demand for AI chips in data centers and smartphones," Marc Einstein, chief analyst at Tokyo-based research and advisory firm ITR Corporation tells the BBC.
The surge in AI applications has not only benefited Samsung but has also contributed to a broader market rally, boosting other tech giants like Nvidia.
The market value of Nvidia, another leading chipmaker, surged past $3 trillion last month. In the last couple of months, Nvidia has already overtaken Apple and Microsoft as the world's most valuable company.
Additionally, high bandwidth memory (HBM), a high-performance type of DRAM, has seen increased demand, particularly for Nvidia's graphics processing units (GPUs) which are crucial for AI computing.
A Closer Look
A woman walks past the Samsung logo displayed on a glass window at the company's Seocho building in Seoul on April 30, 2024. Samsung Electronics said on April 30 that its first-quarter operating profits had risen nearly tenfold year-on-year -- a 931.8 percent increase -- amid recovering chip prices and growing demand.
While Samsung did not disclose detailed earnings for its business divisions, market analysts estimate that the semiconductor division alone earned around 5 trillion won in operating profit.
The device division, which includes smartphones and laptops, is expected to report an operating profit of 2.3 trillion won. Meanwhile, the display and home appliances divisions are each estimated to contribute about 700 billion won in operating profit.
Looking ahead, analysts predict continued growth for Samsung in the second half of the year, driven by sustained demand for HBM products and higher-capacity solid-state drives.
The company's operating profit for the third quarter is expected to jump nearly 400% to 12 trillion won, with sales reaching 82.5 trillion won.
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