Samsung expects 15-fold jump in profits as chip demand soars

5 Jul 2024

Image: © MichaelVi/Stock.adobe.com

The world’s largest maker of memory chips, TVs and smartphone, Samsung has made a strong comeback after a profit plunge last year.

Samsung expects its profits to skyrocket in the second quarter of this year amid a surge in demand for semiconductors as the global AI chip race rages on.

In its latest earnings guidance posted today (5 July), Samsung said it expects to make operating profit of between 10.3trn and 10.5trn Korean won in its second quarter of 2024. This is more than 15 times the 670m Korean won in profits it made in the same period last year.

The global electronics giant also expects sales to be in the region of 73trn to 75trn Korean won, higher than the 60trn it raked in in the second quarter of last year. It posted sales of 71.92trn Korean won in its first quarter this year.

Samsung shares climbed as much as 2.24pc earlier today to a three-year high following the latest guidance, according to CNBC.

Headquartered near Seoul in South Korea, Samsung is the world’s largest maker of memory chips, smartphones and TVs. Its latest earnings mark a strong comeback after it was forced to cut its global chip production ahead of a profit plunge last year. It also fared underwhelmingly in the smartphone market amid stiff competition.

But the company has been turning things around. A focus on generative AI, a key feature of its latest flagship smartphone model Galaxy S24, has helped the company regain a lead in the smartphone market and the demand for AI helped its profits rise back up this year.

Samsung recently announced Young Hyun Jun as the new head of its semiconductor business in a bid to strengthen its competitiveness “amid an uncertain global business environment”. Jun took over the role from Kye Hyun Kyung.

Earlier this year, the company was awarded a $6.4bn grant under the US Chips Act to boost the country’s semiconductor supply chain, days after the US awarded TSMC billions of dollars in similar subsidies and loans to boost semiconductor production.

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Vish Gain is a journalist with Silicon Republic

editorial@siliconrepublic.com