Samsung is expecting a significant increase in its profit for the second quarter of the year. The global memory chip market is experiencing a rebound due to the AI boom, which has contributed to this surge. The South Korean tech giant announced in its preliminary earnings guidance that it anticipates an operating income of 10.4 trillion won for the quarter, marking a substantial 1,452% increase from the previous year. Additionally, revenue has seen a significant jump of 23.31% over the same period, reaching 74 trillion won.
This profit surge follows the successful turnaround of Samsung’s chip division that began in the previous quarter, where operating income saw a 900% increase from the previous year. The return to profitability of the chip division, after five consecutive quarters of losses, played a crucial role in this remarkable growth.
Analysts in South Korea predict that the chip division is likely to have contributed more than half of the operating income in the second quarter. The demand for DRAM and NAND chips has been steadily increasing since late last year, with a particular emphasis on high-bandwidth memory (HBM) used in data centers, driven by the demand for AI technology.
While the smartphone business unit is expected to have contributed around 2 trillion won to the total operating income, the company is set to reveal its complete earnings report by the end of the month. This strong performance in the second quarter, the best in two years for Samsung, is expected to boost morale after a challenging year in 2023, indicating a positive trend for the company.
Looking ahead, the demand for HBM is projected to remain strong throughout the year, with an upcoming deal with Nvidia on the horizon. Samsung is planning to commence mass production of HBM3E in the third quarter, further solidifying its position in the market. Moreover, the impending launch of new foldable devices next week is anticipated to provide an additional uplift to the company’s earnings.
In conclusion, Samsung’s forecasted profit surge in the second quarter reflects the positive momentum in the global memory chip market and the company’s strategic positioning in response to the increasing demand for AI-related technologies. With innovative developments on the horizon and a strong financial performance, Samsung is poised for continued success in the coming quarters.
