AI demand boosts Samsung profits

Samsung Electronics reported a significant surge in its second-quarter operating profit, driven by rising semiconductor prices amid booming demand for AI. The company’s operating profit is estimated to have increased more than 15-fold to 10.4 trillion won ($7.54 billion) from 670 billion won a year earlier, surpassing analysts’ expectations. The surge marks Samsung’s most profitable quarter since Q3 2022, primarily due to higher chip prices and a reversal of previous inventory writedowns.

The company’s revenue likely increased by 23% to 74 trillion won in the second quarter compared to last year’s period. Samsung’s semiconductor division posted its second consecutive quarterly profit as prices for memory chips, particularly high-end DRAM and NAND Flash chips used in AI applications, saw significant increases. According to TrendForce, DRAM and NAND Flash chip prices jumped 13% to 20% from the previous quarter.

However, analysts expect the price increases for memory chips to slow down in the third quarter, with only a 5% to 10% rise forecasted for conventional DRAM and NAND Flash chips. Despite the solid AI-driven demand for high-end chips, Samsung needs to catch up with its rival, SK Hynix, in supplying these advanced chips to major clients like Nvidia. Investors are keenly awaiting Samsung’s outlook on legacy chips and Nvidia’s approval of its latest HBM chips after previous heat and power consumption issues.