Samsung Electronics is set to announce a remarkable 13-fold surge in second-quarter profit compared to the same period last year, driven by soaring demand for artificial intelligence technology which has rejuvenated memory chip prices.
Operating profit for the world’s leading manufacturer of memory chips, smartphones, and TVs likely reached 8.8 trillion won (approx. Sh.817.5B) for the quarter ending June 30.
This estimate, derived from an LSEG Smart estimate of 27 analysts who are recognized for their consistent accuracy, represents Samsung’s highest profit since Q3 2022.
In comparison, the company’s operating profit was 670 billion won (Sh.62.2B) in Q2 of the previous year.
The semiconductor division of the tech giant likely saw continued improvement, marking its second consecutive profitable quarter as memory chip prices rebounded from a mid-2022 to end-2023 slump, which was caused by weak post-pandemic demand for gadgets incorporating these chips.
Analysts attribute the chip industry’s broad recovery to “explosive demand for high-end DRAM chips such as high bandwidth memory (HBM) chips used in AI chipsets, as well as chips used in data centre servers and gadgets that run AI services.”
During the second quarter, memory chip prices experienced a significant increase, with DRAM chips used in tech devices rising by approximately 13% to 18% from the previous quarter and NAND Flash chips used for data storage climbing by 15% to 20%, according to data provider TrendForce.
The estimated Q2 operating profit for Samsung’s chip division was 4.6 trillion won (Sh.427.3B), based on an average of forecasts from 10 analysts.
This is a stark contrast to the 4.36 trillion won (Sh.405B) loss recorded in the same period last year.
Conversely, the mobile business’s Q2 operating profit likely declined compared to last year, despite a similar number of smartphones being shipped.
Analysts cite higher costs for parts and increased marketing and development expenses for AI services as contributing factors.
The mobile division is estimated to have reported an operating profit of around 2.2 trillion won (Sh.204.4B), according to an average of forecasts from 10 analysts, down from a 3.04 trillion won (Sh.282.4B) profit a year ago.
As Samsung prepares to compete with rival Apple at the top end of the market, it plans to unveil its latest flagship foldable phones and mobile accessories, including a new health monitoring ring, on July 10 in Paris.
