AI Boom Likely Raised Samsung Q2 Profit 13-Fold

As memory chip prices rise due to artificial intelligence demand, Samsung Electronics’ second-quarter profit is predicted to rise 13-fold

According to the average LSEG SmartEstimate from 27 analysts, the world’s largest manufacturer of memory circuits, smartphones, and TVs is expected to have increased its operating profit to 8.8 trillion won ($6.34 billion) in the quarter ending June 30. This estimate is weighed toward analysts who are more consistently accurate.

That sum would be Samsung’s most significant profit since the third quarter of 2022. In the previous year’s second quarter, the operating profit was 670 billion won.

The tech giant’s semiconductor division’s performance is expected to improve for the second consecutive quarter as memory chip prices continue to rise from a trough in mid-2022 to the end of 2023. This trough was caused by weak post-pandemic demand for devices that utilize the chips.

A broad recovery in the chip industry is being supported by an explosive demand for high-end DRAM chips, including high-bandwidth memory (HBM) chips that are used in AI chipsets, as well as chips used in data center servers and gadgets that operate AI services, according to analysts.

Memory chip prices increased by approximately 13% to 18% in the second quarter compared to the previous quarter for DRAM chips utilized in technological devices and 15% to 20% for NAND Flash chips used for data storage, according to data provider TrendForce.

According to an average of 10 analysts’ forecasts, Samsung’s semiconductor division’s estimated Q2 operating profit was 4.6 trillion won. This is in contrast to a loss of 4.36 trillion won during the same period last year.

According to analysts, the mobile business’s operational profit in the second quarter likely decreased compared to the previous year despite shipping a comparable number of smartphones. This is attributed to the increased costs of marketing and development for AI services and the steeper costs of parts.

According to an average of forecasts from ten analysts, the mobile business is expected to have reported an operating profit of approximately 2.2 trillion won, a decrease from the 3.04 trillion won profit reported a year ago.

On July 10, Samsung is anticipated to introduce its most recent flagship foldable phones and mobile accessories, which include a new health monitoring ring, in Paris, where it is expected to compete with Apple at the high end of the market.