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Samsung Posts Record Q2 Profits Driven by AI Demand

Massive Surge in Q2 Earnings

South Korean tech giant Samsung Electronics Co. announced on Friday an astonishing more than 15-fold increase in its second-quarter operating profit, driven by the booming artificial intelligence (AI) sector that has significantly boosted chip prices. As the world’s largest memory chipmaker, Samsung is expected to continue posting impressive earnings and sales growth for the remainder of the year, supported by strong demand for AI chips such as high-bandwidth memory (HBM), according to analysts.

In a regulatory filing, Samsung estimated its April-June operating profit at 10.4 trillion won ($7.5 billion), a staggering 1,452% increase from 670 billion won in the year-earlier period on a consolidated basis. This preliminary operating profit exceeds the market consensus forecast of 8.3 trillion won. If these figures are confirmed later this month, the second quarter will mark Samsung’s most profitable period since the third quarter of 2022, when it posted a profit of 10.8 trillion won.

Second-quarter sales likely rose by 23.3% from the same period a year earlier, reaching 74 trillion won. Samsung plans to announce detailed quarterly results, including net profit and divisional performance, on July 31.

Following the better-than-expected earnings announcement, Samsung’s shares rose by 3%, closing at 87,100 won on Friday, outperforming the benchmark Kospi index’s 1.3% rise.

Samsung’s Q2 Memory Profit Surges to $5.1 Billion

Although Samsung did not provide a detailed divisional performance breakdown, its Device Solutions (DS) division, which oversees its chip business, likely posted much stronger profit than in the first quarter, driven by higher average DRAM and NAND sales prices.

Analysts expect Samsung’s chip business to report a second-quarter operating profit of between 6.5 trillion won and 7 trillion won ($4.7 billion to $5.1 billion), compared to the first-quarter profit of 1.9 trillion won. The explosive demand for high-end DRAMs, including HBM used in AI chipsets, and chips utilized in data center servers and gadgets running AI services, has buoyed chip prices.

According to market tracker TrendForce, DRAM chip prices rose between 13% and 18% in the second quarter compared to the first quarter, while NAND prices gained between 15% and 20% quarter-over-quarter.

Samsung’s device business, which includes smartphones and laptops, likely posted an operating profit of 2.3 trillion won in the seasonally weak second quarter, down from the first-quarter profit of 3.5 trillion won.

Q3 Outlook

Analysts anticipate continued momentum for Samsung in the upcoming quarters due to robust demand for AI chips, the launch of new flagship Galaxy smartphones, and the debut of the Galaxy Ring, a health tracker, in the third quarter.

On Thursday, Samsung officially launched dedicated HBM and advanced chip packaging teams as part of its semiconductor division reorganization under the new leadership of Jun Young-hyun. Jun vowed to surpass local rival SK Hynix Inc., the leader in the HBM segment.

The formation of these two dedicated teams, part of Samsung’s organizational revamp, is the first restructuring move since Vice Chairman Jun took charge of Samsung’s semiconductor business in May to tackle what the company called a “chip crisis.”

Samsung, committed to tripling its HBM output this year, is eager to pass the quality testing currently underway by Nvidia Corp., the world’s top AI chip designer.

Analysts expect general-purpose DRAM prices to remain solid in the third quarter as chipmakers predominantly use their facilities to produce more profitable HBM chips, resulting in a tight supply of commoditized DRAMs.