Samsung forecasts a surge in second-quarter profits as the global memory chip market continues to recover thanks to the AI boom.
The South Korean tech giant said in its preliminary earnings guidance on Friday that it expects operating income of 10.4 trillion won for the quarter, up 1.452 percent from the same period last year. Revenue also rose 23.31 percent year-on-year to 74 trillion won.
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The profit surge continues a turnaround at Samsung’s chip division that began last quarter, when operating income jumped 900% year-on-year. The chip division’s return to profitability after five previous quarters of losses directly contributed to that increase.
The company’s chip division is expected to make a big contribution in the second quarter, accounting for about half or more of total operating income, according to Korean analysts.
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DRAM and NAND prices have been rising steadily since late last year. DRAM, especially high-bandwidth memory (HBM), used in data centers, is in particularly high demand thanks to AI.
Meanwhile, Samsung’s smartphone business is expected to contribute about 2 trillion won to total operating income. The company will release its full earnings report at the end of the month.
A strong second-quarter result, its best in two years, will certainly lift Samsung’s spirits after a dismal 2023. And things will only get better.
Demand for HBM is expected to be strong throughout the year and the company has agreements with Nvidia is right around the corner. Samsung said it plans to start mass production of HBM3E in the third quarter. In addition to this continued demand for the chip, Samsung is also preparing to launch a new foldable phone next week, which should further boost the company’s earnings.
