Samsung is expecting a significant increase in its second-quarter profits as the global memory chip market continues to grow, driven by the AI industry. The South Korean tech giant announced in its preliminary earnings guidance that it predicts an operating income of 10.4 trillion won for the quarter, marking a whopping 1,452% increase from the previous year. Revenue also saw a substantial jump of 23.31% to reach 74 trillion won.
This surge in profits is a continuation of the positive trend in Samsung’s chip division that began in the previous quarter, where operating income saw a 900% increase from the previous year. The division’s return to profitability after several quarters in the red played a significant role in this turnaround.
Analysts in South Korea believe that the chip division is likely to have been the primary driver of the strong performance in the second quarter, contributing at least half of the operating income. The increasing demand for DRAM and NAND chips, particularly high-bandwidth memory (HBM) used in data centers for AI applications, has been a key factor in this growth.
On the other hand, Samsung’s smartphone business unit is expected to have contributed around 2 trillion won to the total operating income. The company is set to release its full earnings report by the end of the month, providing a more detailed breakdown of the financial performance.
This exceptional performance in the second quarter, the best in two years, is a positive sign for Samsung after a challenging year in 2023. The demand for HBM chips is anticipated to remain strong throughout the year, with an upcoming deal with Nvidia on the horizon. Samsung is also gearing up to start mass production of HBM3E in the third quarter, further boosting its earnings.
In addition to the rise in chip demand, Samsung is preparing to unveil its new foldable devices next week, which is expected to drive further growth in earnings. The company’s strategic moves in the chip market and the upcoming product launches indicate a promising outlook for Samsung in the near future.
