Samsung’s profit surges after AI propels recovery in chips

Samsung posted its fastest pace of sales and profit growth in years, reflecting a recovery in memory chip demand as AI development accelerates globally.

The world’s largest maker of memory chips and smartphones said operating profit grew more than 15-fold to 10.4 trillion Korean Won (€6.9 billion) in its preliminary results for the June quarter, outstripping market projections. Sales grew around 23 per cent, the biggest rise since Covid-era highs clocked in 2021. Samsung is slated to announce final earnings with divisional breakdowns on July 31.

Samsung’s stock gained 1.7 per cent during early morning trade in Seoul on Friday.

The results underscore how the €150 billion memory market is bouncing back this year from a severe post-Covid downturn, driven by a boom in datacenters and AI development. That demand pushed average memory chip prices 15 per cent higher from the previous quarter, CLSA estimates, helping Samsung’s largest division reverse year-earlier losses.

Decarbonisation of electricity by 2040 is on course, says ESB boss Paddy Hayes

---

When inheritance can be more trouble than it is worth

---

Will the coming election manifestos tackle economic inequality and poverty?

---

Makhlouf warns against budget giveaway in letter to Chambers

---

Both DRAM and NAND prices were lifted by demand for AI servers and enterprise data storage, helping to reverse inventory valuation losses, said Sanjeev Rana, an analyst at CLSA Securities Korea. Samsung’s foundry, or contract chipmaking, operations also got a boost from improved IT demand, he said.

South Korea’s government said this week the country exported the most semiconductors on record in June, driving its trade surplus to $8 billion – the largest since 2020.

While Samsung is benefiting from a broader industry recovery, investors remain concerned about its market position in the newer field of AI chips against SK Hynix. Its shares have lagged its smaller rival, now the leading supplier of high-bandwidth memory or HBMs, a vital component of AI hardware. It’s struggled to get its latest HBM chips certified by Nvidia, which has become the world’s most valuable chipmaker thanks to insatiable demand for AI accelerators.

Samsung is unveiling results days before union organisers plan to stage a three-day walkout among its 28,000-plus members – including at key chip plants – over a pay dispute. The proposed action follows a strike involving a small number of staff last month that was the first in the company’s 55 years. It’s unclear for now how many employees intend to participate in Monday’s walkout.

Longer term, Samsung’s focus remains on winning more business in AI memory, while at the same time allaying fears of oversupply.

Investors have become increasingly concerned about Samsung’s response to SK Hynix, which recently reported its fastest pace of revenue growth since at least 2010. That’s propelled a roughly 60 per cent rally in SK Hynix shares since the start of 2024, compared with a gain of about 8 per cent for Samsung’s stock.

Samsung in May unexpectedly named Jun Young Hyun – a memory chip veteran who is returning to the company after leading Samsung SDI Co. – as the new leader of its most important business line, replacing Kyung Kye-hyun. – Bloomberg