Samsung's second-quarter operating profit surges 1,458% due to continued demand for AI technology, exceeding analyst predictions.

• On Wednesday, Samsung Electronics reported better-than-anticipated revenue and profit figures, owing to the continued strong demand for its high-end memory chips used in AI computing.
• The company's revenue for the quarter was 74.07 trillion Korean won, a 23.42% increase from the previous year, and its operating profit surged by 1,458.2%.

On Wednesday, Samsung Electronics reported higher-than-anticipated revenue and operating profit in the second quarter, due to the continued strong demand for its advanced memory chips used in AI training.

According to LSEG, Samsung's second-quarter results differed from analysts' average estimates.

• 74.07 trillion Korean won vs. 73.74 trillion Korean won: revenue.
• Operating profit: 10.44 trillion Korean won vs 9.53 trillion Korean won

Samsung's quarterly revenue increased by 23.42% compared to the previous year, and its operating profit surged by 1,458.2%.

The AI boom has led to a surge in demand for high-bandwidth memory chips, which are essential for AI chips. This has benefited companies such as Samsung Electronics and SK Hynix, the top two memory chip manufacturers globally.

According to a report by CLSA, Samsung Electronics is expected to experience quarterly sequential profit growth due to the predicted increase in memory's average selling prices for the next several quarters.

According to SK Kim of Daiwa Capital Markets, who stated in a report last month, we anticipate a memory price increase trend until 1H25 due to the growing concerns about memory supply, which is driven by the robust demand for HBM and high density enterprise SSD, both of which require more wafers and have longer production lead times.

A semiconductor-based storage device used in computers is referred to as SDD, or solid-state drive.

The world's largest memory chip maker experienced a rebound in business last year as memory chip prices recovered on AI optimism, despite record losses in 2023 due to a post-Covid slump in demand for memory chips and electronics.

Nvidia has reportedly cleared tests for the use of Samsung's HBM3 chips in its processors for the Chinese market. SK Hynix has been the sole supplier of HBM3 chips to Nvidia until now.

SK Hynix recorded its highest quarterly profit in two years on Thursday, recovering from a loss of 2.88 trillion won in the same period last year.

According to Counterpoint Research, Samsung is expected to experience a "greater uptick to its operational performance" in the second half, primarily due to the growth in memory chips and the "premiumisation" trend of smartphones.

Samsung has made its latest Galaxy devices, including the Z Fold6, Z Flip6, Watch Ultra, and Ring, globally available as part of its push for AI-powered products.

According to Neil Shah, research vice president at Counterpoint Research, SK Hynix and Micron will continue to challenge Samsung in memory, particularly in the AI segment with HBM growth, as well as in the AI smartphone and PC market with close tie-ups and optimizations with key compute players such as Qualcomm, Intel, and Nvidia.

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