South Korean tech giant Samsung Electronics has reported an approximately 1,800% surge in profit—nearly 19 times higher than before—fueled by the rising global demand for memory chips used in artificial intelligence (AI) technology. The company projected an operating profit of 89.4 trillion won for the three-month period ending in June. This figure is equivalent to approximately £43.6 billion or $58.4 billion. This marks the third consecutive quarter in which Samsung has achieved record operating profits. Major South Korean companies typically release earnings forecasts to provide investors with an outlook prior to publishing detailed financial reports. The BBC reported this news online.
The forecast, released on Tuesday ahead of the full financial results due later this month, indicates a significant rise in chip prices as demand for semiconductors continues to outstrip supply. Samsung’s earnings outlook shows sales of approximately 171 trillion won for the quarter, more than double the figure from the same period last year. Mark Einstein, an analyst at market research firm Counterpoint Research, described this as one of the best quarterly financial results in Samsung’s history. According to him, Samsung’s performance is approaching the record set by Nvidia earlier this year.
He attributed the success entirely to the rise of the AI-driven market. Memory chip manufacturers are reaping huge benefits due to limited supply and unprecedented demand. With the supply crunch persisting, Samsung has also raised the prices of its memory chips. Market research firm IDC noted that the demand for semiconductors for data centers and AI infrastructure is unlike anything the memory industry has ever seen before. This situation is also impacting the supply of chips for everyday consumer electronics. IDC technology analyst Bryan Ma stated that there are no signs of demand for AI data centers slowing down; consequently, they anticipate that chip supplies will remain constrained throughout the coming year.
Samsung is one of the world’s largest semiconductor manufacturers. It produces chips for various technology companies, including Nvidia and Google, while also manufacturing its own electronic products. Driven by the massive demand for AI chips, the share prices of major technology companies have surged in recent months. However, Samsung’s stock price fell by more than 8 percent on the Seoul stock market on Tuesday, as many investors had anticipated even higher profits. Nevertheless, Samsung’s market value has more than doubled since the beginning of the year. Meanwhile, the market value of its South Korean rival, SK Hynix, has risen by over 200 percent. Fueled by the strong performance of these two companies, South Korea’s benchmark stock index, the KOSPI, has climbed more than 80 percent this year.
Last May, Nvidia announced record quarterly sales and profits, with revenue exceeding $80 billion for the January-March period. Yet, Nvidia’s share price dropped at the time; many analysts attributed this to investor anxiety regarding potential rising competition in the AI chip market. In June, the South Korean government announced plans to invest at least $880 billion over the next few years in various projects—led by Samsung and SK Hynix—to boost the country’s chip manufacturing capacity. Meanwhile, rival technology firms in Japan, China, and Taiwan are also investing heavily in new chip factories to meet the rapidly growing demand for AI chips.
