By Joyce Lee and Heekyung Yang
SEOUL (Reuters) – Samsung Electronics Co Ltd forecast strong demand for artificial intelligence-powered chips in the second half of this year, reporting a more than 15-fold increase in its second-quarter operating profit.
“AI servers are expected to capture a larger share of the (memory) market in the second half of 2024 as major cloud service providers and enterprises expand their investments in AI,” Samsung said in a statement.
Semiconductor prices have soared on the back of the artificial intelligence boom, lifting third-quarter earnings at the world’s largest maker of memory chips, smartphones and TVs from a low a year ago.
Samsung shares rose 0.9% in morning trading, compared with a 0.5% rise in the benchmark index.
Samsung said operating profit rose to 10.4 trillion won ($7.52 billion) in the April-June period, compared with 670 billion won in the same period a year earlier.
It was Samsung’s highest operating profit since the third quarter of 2022, driven by the chip division’s return to form as a cash cow for the tech giant after a slump caused by weak post-pandemic demand for chip-based gadgets.
Potato chips are booming.
The chipmaker reported a profit of 6.45 trillion won, the highest since the second quarter of 2022 and its second straight quarterly profit.
Huge demand for advanced DRAM chips such as high-bandwidth memory (HBM) chips used in AI chips, as well as chips used in data center servers and devices that power AI services, has helped drive up chip prices.
South Korean rival SK Hynix also said last week that demand for AI chips would continue to grow, as it reported its highest quarterly profit since 2018.
Samsung has yet to meet AI chip leader Nvidia’s (NASDAQ:NVDA) criteria for its fifth-generation HBM chips, called HBM3E, though Nvidia has agreed to use Samsung’s fourth-generation HBM – called HBM3 – in its less advanced graphics processor called H20, which is being developed for the Chinese market, sources told Reuters.
Samsung said that with production capacity focused on HBM, server DRAM and server solid-state drives (SSDs) for AI applications, traditional memory chip supplies for PCs and notebooks will be constrained in the second half of the year.
Revenue rose 23 percent to 74 trillion won.
(1 dollar = 1,383.0100 won)
