Samsung Electronics is forecasting an astounding 15-fold increase in profits for the three months to June 2024 compared to the same period last year. This remarkable growth is fuelled by an artificial intelligence (AI) boom that has significantly boosted the prices of advanced chips, propelling the company’s second-quarter forecast.
The South Korean tech titan, renowned as the world’s largest manufacturer of memory chips, smartphones, and televisions, saw its shares rise by more than 2% during early trading hours in Seoul following this announcement.
Earlier this year, Samsung reported an impressive more than 10-fold increase in profits for the first quarter. For the second quarter, the company expects its profits to soar to 10.4 trillion won (£5.9bn), a substantial leap from last year’s 670 billion won. This exceeds analysts’ forecasts of 8.8 trillion won, according to LSEG SmartEstimate.
Marc Einstein, chief analyst at Tokyo-based research and advisory firm ITR Corporation, highlighted the surging demand for AI chips in data centres and smartphones as a key driver. “Right now, we are seeing skyrocketing demand for AI chips in data centres and smartphones,” he remarked.
This optimism about AI is contributing to a broader market rally over the past year, which saw the S&P 500 and the Nasdaq in the United States reach new records. The market value of chip-making giant Nvidia surged past $3 trillion last month, briefly holding the title of the world’s most valuable company. “The AI boom which massively boosted Nvidia is also boosting Samsung’s earnings and indeed those of the entire sector,” Einstein added.
Samsung Electronics, the flagship unit of the South Korean conglomerate Samsung Group, is not just riding the AI wave but also gearing up for potential challenges. Next week, the tech company faces a possible three-day strike starting on Monday. The union of workers is demanding a more transparent system for bonuses and time off, posing a significant challenge for the company amidst its soaring success.
