Samsung Rides AI Wave to Record-Breaking Profit

Samsung Electronics is on track for its best profit since 2022, driven by a surge in demand for high-performance memory chips used in artificial intelligence applications. The South Korean tech giant is expected to report a 15-fold increase in its second-quarter operating profit, fueled by the growing adoption of AI technology.

According to reports, Samsung's operating profit is projected to reach 10.4 trillion won ($7.54 billion) for the April-to-June period, exceeding analyst expectations of 8.8 trillion won. This remarkable growth is attributed to the increasing demand for high-bandwidth memory (HBM) chips, which are used in AI servers and data centers.

Samsung's chip division, which had faced significant losses in recent years, is expected to drive the company's profit growth. The division is projected to earn around 5 trillion won in operating profit, thanks to the rebounding semiconductor prices and growing demand for AI-related chips.

The increasing adoption of AI technology has led to a surge in demand for HBM chips, which are used in graphics processing units (GPUs) and high-performance computing applications. Samsung's HBM revenue rose about 50% from the previous quarter, and the company expects HBM3E chips to account for 60% of its HBM sales by the fourth quarter.

While Samsung's mobile devices business suffered a drop in operating profit due to steeper parts costs, the company expects overall demand for smartphones to increase in the second half of 2024, driven by growing demand for premium products with AI functions.

Looking ahead, analysts predict continued growth for Samsung, 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.

Credit – Reuters