Tech & Gadgets

Samsung's Q2 Profit Soars 1,452% on AI Chip Demand Surge

by Philip Lee

Updated July 08, 2024

Samsung's Q2 Profit Soars 1,452% on AI Chip Demand Surge — Source: Samsung Electronics

SEOUL, South Korea — Samsung Electronics (005930. KS) announced its preliminary Q2 2024 Business results with a 1,452% quarterly profit increase.

The surge in AI has led to a notable increase in the price of memory chips utilized in AI-powered devices and data centers.

The South Korean technology conglomerate anticipates a 23.3% year-on-year increase in revenue for the second quarter, reaching KRW 74 trillion.

Samsung Electronics projected its operating profit to be KRW 10.4 trillion (US$7.5 billion) in Q2 2024.

It has exceeded the expectations of analysts, who had anticipated an operating profit of KRW 8.3 trillion.

Although Samsung did not provide a breakdown by division, analysts estimate that its chip business generated an operating profit of KRW 6.5-7 trillion (US$4.7-US$5.1 billion), representing an increase from KRW 1.9 trillion in the previous quarter.

The surge is attributed to rising prices for dynamic random-access memory (DRAM) and NAND flash memory, particularly high-bandwidth memory (HBM) used in artificial intelligence (AI) applications.

In a recent report, market researcher TrendForce indicated that the prices of DRAM and NAND chips increased by 13-18% and 15-20% in quarter on quarter.

Samsung's device business, including smartphones, is estimated to have generated KRW 2.3 trillion in Q2 2024, a decline from the KRW 3.5 trillion recorded in Q1 2024

This decline is attributed to seasonal factors.

On Friday, the closing price of Samsung shares was KRW 87,100, representing a 3% increase over the previous day's closing price, which outpaced the broader market's 1.3% gain.

The company will issue a comprehensive financial statement, including net profit figures, on July 31.

(1 USD = 1,379.66 KRW)