Samsung's second-quarter profits expected to rise 13-fold thanks to AI boom

AI News

By Joyce Lee

SEOUL (Reuters) – Samsung Electronics is expected to post a 13-fold increase in second-quarter profit from a year earlier as demand for artificial intelligence (AI) technology helps drive a recovery in memory chip prices.

The world's largest maker of memory chips, smartphones and TVs is expected to see its operating profit rise to 8.8 trillion won ($6.34 billion) for the quarter ended June 30, according to an average of 27 analysts from LSEG's SmartEstimate, which weights those who are more consistent and accurate.

The figure marks Samsung's highest profit since the third quarter of 2022. It is large compared to its operating profit of 670 billion won in the second quarter of last year.

Memory chip prices have continued to rise since hitting bottom between mid-2022 and the end of 2023 due to sluggish demand for equipment that uses the chips after the pandemic, and the tech giant's main semiconductor division is likely to see profits improve for a second consecutive quarter.

Analysts say the broader chip industry recovery is being underpinned by exploding demand for high-end DRAM chips, such as the high-bandwidth memory (HBM) chips used in AI chipsets and the chips used in data center servers and gadgets that run AI services.

Memory chip prices rose about 13% to 18% sequentially in the second quarter for DRAM chips used in high-tech devices, while prices for NAND flash chips used for data storage rose 15% to 20% according to data provider TrendForce.

Samsung's semiconductor division's second-quarter operating profit is estimated at 4.6 trillion won, according to the average forecast of 10 analysts, a big increase from a loss of 4.36 trillion won in the same period last year.

Analysts said the company's mobile business is likely to report a decline in second-quarter operating profit compared to the previous year, despite smartphone shipments remaining flat from the previous year, due to rising component costs and increased marketing and development costs for AI services.

According to the average forecast of 10 analysts, operating profit for the mobile business is expected to be around 2.2 trillion won, down from 3.4 trillion won a year earlier.

Samsung is expected to unveil its latest flagship flip phone and mobile accessories, including a new health-monitoring ring, in Paris on July 10 to compete with rival Apple at the top end of the market.

(1 dollar = 1,387.4200 won)

(Reporting by Joyce Lee and Miral Fahmy Editing by

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