Samsung flags strong AI demand as second-quarter profit rises on higher chip prices By Reuters
Written by Joyce Lee and Heekyong Yang
SEOUL (Reuters) – Samsung Electronics predicted strong demand driven by chip manufacturing in the second half of this year, as it reported a 15-fold increase in its second-quarter operating profit.
“In the second half of 2024, AI servers are expected to take a large share of the (memory) market as major cloud service providers and enterprises expand their AI investments,” Samsung (KS:) said in a statement.
Resurgent semiconductor prices fueled by the AI boom boosted June-quarter earnings at the world's largest maker of memory chips, smartphones and TVs from a low base a year ago.
Samsung's share price rose 1.1% in morning trade compared with a 0.3% rise in the benchmark index.
Operating profit rose to 10.4 trillion won ($7.52 billion) in April-June, from 670 billion won a year earlier, Samsung said. That was in line with its average winnings of 10.4 trillion flagged earlier this month.
It was Samsung's highest operating profit since the third quarter of 2022, boosted by the chip division's return to status as the tech giant's cash cow after a slump caused by weak post-pandemic demand for gadgets that use chips.
The chip division reported a net profit of 6.45 trillion won, the highest since the second quarter of 2022, and its second consecutive quarterly profit.
Explosive demand for high-end DRAM chips such as high bandwidth memory (HBM) chips used in AI chipsets, as well as chips used in data center servers and gadgets that use AI services have helped drive up prices.
As production capacity is focused on HBM, server DRAMs and server solid-state drives (SSDs) for AI applications, the general supply of PC and memory memory chips will be restricted in the second half of the year, Samsung said.
Revenue rose 23% to 74 trillion won.
($1 = 1,383.0100 won)
