Samsung expects AI to boost profits

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Samsung Electronics expects its profits for the three months ending June 2024 to increase 15-fold from the same period last year.

The artificial intelligence (AI) boom is driving up prices for advanced chips, prompting the company to raise its second-quarter outlook.

The South Korean technology giant is the world's largest maker of memory chips, smartphones and televisions.

The announcement sent Samsung shares up more than 2% during trading hours in Seoul.

The company also reported a more than 10-fold increase In profits for the first three months of the year.

The company said it expects its profit for the current quarter to rise to 10.4 trillion won ($7.54 billion, £5.9 billion), up from 670 billion won last year.

This exceeds analysts' expectations of 8.8 trillion won, according to LSEG SmartEstimate.

“We're seeing a surge in demand for AI chips in data centers and smartphones right now,” said Mark Einstein, principal analyst at Tokyo-based research and consulting firm ITR Corp.

Optimism about AI is one of the reasons for the broad market rally last year, with the U.S. S&P 500 and Nasdaq hitting new records on Wednesday.

Chipmaker Nvidia's market capitalization surpassed $3 trillion last month, briefly holding the top spot as the world's most valuable company.

“The AI ​​boom that has given Nvidia such a boost is also boosting Samsung's revenues and the industry as a whole,” Einstein added.

Samsung Electronics is the flagship division of South Korean conglomerate Samsung Group.

The tech company could face a three-day strike next week, due to begin on Monday, with unions demanding a more transparent system for bonuses and holidays.

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