Samsung Electronics is on track to report a remarkable 13-fold increase in second-quarter profit compared to the same period last year, driven by a resurgence in memory chip prices fueled by escalating demand for artificial intelligence (AI) technology.
Operating profit for the world’s largest manufacturer of memory chips, smartphones, and televisions is projected to have surged to 8.8 trillion won ($6.34 billion) in the quarter ending June 30, based on the average of an LSEG SmartEstimate from 27 analysts, who are consistently accurate. This would mark Samsung’s highest profit since the third quarter of 2022 and represents a significant leap from the 670 billion won operating profit recorded in the second quarter of last year.
| Metric | Q2 2023 (Projected) | Q2 2022 |
|---|---|---|
| Operating Profit | 8.8 trillion won ($6.34 billion) | 670 billion won |
| Semiconductor Division Profit | 4.6 trillion won | -4.36 trillion won |
| Mobile Business Profit | 2.2 trillion won | 3.04 trillion won |
Samsung’s pivotal semiconductor division is expected to continue its upward trajectory, posting its second consecutive quarterly profit. The improvement is attributed to rising memory chip prices, which rebounded from a slump that extended from mid-2022 to the end of 2023 due to weakened demand for gadgets post-pandemic.
- Explosive demand for high-end DRAM chips: High bandwidth memory (HBM) chips used in AI chipsets and chips used in data center servers are driving a broad recovery in the chip industry.
- Price increase: Memory chip prices for DRAM chips used in tech devices rose by approximately 13% to 18%, and NAND Flash chips used for data storage saw a 15% to 20% price jump compared to the previous quarter.
- Analyst projections: The estimated Q2 operating profit for Samsung’s chip division is 4.6 trillion won, contrasting sharply with a 4.36 trillion won loss for the same period last year.
While Samsung’s mobile business is projected to experience a decline in operating profit despite shipping a similar number of smartphones, analysts attribute this to higher parts costs and increased marketing and development expenses for AI services.
- Estimated operating profit: The mobile business likely reported an operating profit of around 2.2 trillion won, down from 3.04 trillion won a year ago.
- Increased costs: The rise in operating costs is due to steeper parts’ costs and higher marketing and development expenses for AI services.
Samsung is set to challenge rival Apple in the high-end market segment with the launch of its latest flagship foldable phones and mobile accessories, including a new health-monitoring ring, on July 10 in Paris. This strategic launch is expected to bolster Samsung’s competitive edge in the premium smartphone market.
The recovery in memory chip prices is part of a larger industry trend, as demand for AI-driven technologies and services continues to grow. High-end DRAM chips and NAND Flash chips are crucial components in AI chipsets and data center servers, which are essential for running advanced AI services and managing large-scale data storage.
Analysts remain optimistic about Samsung’s continued growth, driven by its robust semiconductor division and strategic initiatives in the mobile business. The company’s focus on AI technology and premium products positions it well to capitalize on emerging trends in the tech industry.
- Samsung Electronics expects a significant profit increase: A 13-fold rise in Q2 profit year-over-year, driven by AI technology demand.
- Semiconductor division’s robust recovery: Expected to post a 4.6 trillion won profit, reversing a loss from the previous year.
- Challenges in the mobile business: Despite steady smartphone shipments, higher costs impact operating profit.
- Strategic product launch: Upcoming flagship foldable phones and health-monitoring ring to enhance market competition.
- Positive industry outlook: Rising memory chip prices and AI technology demand underpin growth projections.
As Samsung Electronics prepares to report its financial results, the market eagerly anticipates the detailed performance metrics that will highlight the company’s strategic successes and challenges in an evolving technological landscape. The anticipated profit surge underscores the significant impact of AI technology on the semiconductor industry and positions Samsung for continued growth in the competitive global market.
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