By Joyce Lee
SEOUL (Reuters) – Samsung Electronics (KS:) is expected to post a 13-fold rise in second-quarter profit from a year earlier as demand for artificial intelligence technology drives a rally in memory chip prices.
The world’s largest maker of memory chips, smartphones and TVs likely posted operating profit of 8.8 trillion won ($6.34 billion) in the quarter ended June 30, according to the average of LSEG’s SmartEstimate of 27 analysts, weighted toward those who are more consistently accurate.
That amount would be Samsung’s highest profit since the third quarter of 2022. It compares with an operating profit of 670 billion won in the second quarter of last year.
The performance of the tech giant’s key semiconductor division likely continued to improve to its second straight quarterly profit as memory chip prices continue to rise from a mid-2022 to late-2023 low that was caused by weak post-pandemic demand for devices using the chips.
Explosive demand for high-end DRAM chips, such as high-bandwidth memory (HBM) chips used in AI chipsets, as well as chips used in data center servers and devices running AI services, are underpinning a broad recovery in the chip industry, analysts said.
During the second quarter, memory chip prices rose 13% to 18% compared with the previous quarter for DRAM chips used in technology devices and 15% to 20% for NAND Flash chips used for data storage, according to data provider TrendForce.
According to the average forecast of 10 analysts, Samsung’s chip division’s estimated second-quarter operating profit was 4.6 trillion won, compared with a loss of 4.36 trillion won in the same period last year.
Analysts said its mobile business likely saw operating profit decline in the second quarter compared with last year despite shipping a similar number of smartphones, due to higher parts costs and higher marketing and development costs for artificial intelligence services.
The mobile phone business likely reported an operating profit of around 2.2 trillion won, according to an average of 10 analysts’ forecasts, down from a profit of 3.04 trillion won a year ago.
Samsung is expected to compete with rival Apple (NASDAQ:) at the high end of the market when it launches its latest foldable phones and mobile accessories, including a new health-monitoring ring, on July 10 in Paris.
(1 dollar = 1,387.4200 won)
