Samsung Electronics expects to post a 19-fold jump in profits for the three months to June, propelled by a global frenzy for artificial intelligence memory chips that has sent semiconductor prices soaring. The South Korean giant forecast operating profits of 89.4tn won (£43.6bn; $58.4bn) for the quarter, marking its third consecutive record. Sales more than doubled to about 171tn won compared with the same period last year.
“This has everything to do with the AI boom as memory companies continue to ride a tidal wave driven by limited supply and unprecedented demand,” said Marc Einstein, industry analyst at Counterpoint Research. He called the projected earnings “one of the best quarterly performances ever”, close to the tech sector record set by Nvidia earlier this year.
“Samsung forecasts 19-fold profit jump on AI chip demand, but shares fall 7% as investors expected more.”
Demand for semiconductors for data centres and other AI infrastructure has been “different from anything the memory industry has navigated”, according to research firm IDC, tightening supply of chips for everyday electronics. “We do expect supplies to be tight through next year given the unabated demand from AI data centres,” said Bryan Ma, a tech devices researcher at IDC.
Despite the bumper profits, Samsung’s shares fell almost 7% in Seoul on Tuesday as some investors had expected an even stronger performance. The stock has still more than doubled since the start of the year, while rival SK Hynix has jumped by more than 200%. Their strength has lifted South Korea’s benchmark Kospi index by more than 80% this year.
Samsung, one of the world’s biggest semiconductor manufacturers, makes chips for Nvidia and Google. In May, Nvidia posted record quarterly sales and revenue topping $80bn, but its stock fell amid analyst concerns about rising competition. In June, South Korea unveiled plans for at least $880bn of investments in projects led by Samsung and SK Hynix to expand the country’s chip manufacturing capacity.