Samsung’s profits estimated to explode in Q2 2024 thanks to AI

Samsung Brand Store In The Mall Signboard Close up Russia, Moscow, 2022 10 07

After a staggering 85% drop in annual profit in 2023, Samsung began 2024 with a bang. Its Q1 profit soared an eye-popping 933% to reach KRW 6.61 trillion (roughly $4.8 billion). The company may top that financial performance in the second quarter. Industry analysts estimate it to take home over KRW 8.5 trillion in Q2 (~$6.1 billion), with some estimating an operating profit of KRW 8.8 trillion (~$6.4 billion). That’s a 13-fold increase in profit over Q2 2023, all thanks to AI.

The AI boom helped Samsung increase its profit in Q2 2024

Samsung is the world’s largest maker of smartphones, TVs, and memory chips. The latter product category has been its cash cow for years. A sudden drop in memory chip demand and prices in 2023 hurt the company badly. Its semiconductor division posted operating losses for the first time in 14 years, while its overall earnings hit a 14-year low. Thankfully, this slowdown didn’t last long as demand and prices recovered in 2024, benefitting Samsung big time.

A weak post-pandemic demand for electronics caused last year’s price drop. However, with the industry rapidly adopting AI, memory chip demand has surged this year. High-end DRAM chips such as high bandwidth memory (HBM) solutions and other chips used in AI data centers are in high demand. Market estimates say DRAM chip prices increased 13% to 18% in Q2 2024, while NAND Flash storage chip prices increased 15% to 20%.

Samsung is reaping the benefits of this price rise. Data solution provider FactSet recently compiled consensus estimates from 33 analysts forecasting an operating profit of KRW 8.547 trillion for the quarter ended in June. A separate LSEG SmartEstimate average from 27 analysts says Samsung’s second-quarter profit may go up to KRW 8.8 trillion. These figures are a massive jump (13x) over the Korean firm’s Q2 2023 profit of KRW 0.67 trillion.

The semiconductor division, riding on the back of memory chips, is the driving force behind Samsung’s profit increase in Q2 2024. Citigroup analysts expect the business unit to post an operating profit of KRW 5.1 trillion this past quarter That’s nearly 60% of the company’s total profit for the period. What a turnaround this is proving to be, all thanks to the AI boom. Samsung is currently seeking approval for its advanced HBM products from Nvidia.

The Korean firm may soon share its earnings estimate

Samsung usually posts its quarterly earnings estimates about a week after the quarter ends. So, its Q2 2023 earnings estimate may come soon. A more detailed report will follow at the end of the month. The Korean firm would be happy with the rise in chip prices but would be looking to increase profit from other business divisions. It launches the Galaxy Z Fold 6 and Galaxy Z Flip 6 foldables on July 10. The event will also bring new watches, earbuds, and a smart ring.

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