Samsung Electronics has witnessed a monumental rise in its second-quarter operating profits, recording an increase of nearly 15-fold compared to the previous year. This significant growth is attributed to the surging demand for its memory chips, which are essential for AI training and align perfectly with the company’s earlier projections.
Robust market demand fuels growth
Samsung’s recent financial disclosure revealed a second-quarter operating profit of 10.44 trillion Korean won, up dramatically from 670 million won in the same period last year. The company’s total revenue also grew substantially, reaching 74 trillion Korean won, a 23.42% increase from the previous year’s 60 trillion.
These figures surpassed Samsung’s initial revenue expectations, which were between 73 trillion and 75 trillion Korean won. The company attributes its impressive performance to favorable market conditions that have driven up sales prices. Particularly, the demand for AI services has seen a marked increase, with cloud service providers and businesses investing heavily in AI capabilities for their servers.
Segment-specific performance insights
Despite a general slump in PC demand, Samsung reported stable demand for mobile products, primarily driven by orders from Chinese original equipment manufacturers (OEM). The company noted robust demand for server applications, significantly bolstering its quarter-on-quarter earnings. This demand spike is largely due to the increased adoption of generative AI applications requiring advanced memory solutions.
Samsung expects AI servers to dominate the market in the latter half of 2024, bolstered by continued investments from cloud service providers. The company is also optimistic about mobile demand, anticipating new smartphone releases and AI adoption to stimulate further growth in mobile display sales.
Strategic moves to address AI product demand
Amidst this surge in demand, competition among panel makers is expected to intensify. However, Samsung is proactively expanding its capacity to meet the increasing need for AI products. The focus will be on enhancing the production of HBM (High Bandwidth Memory) memory chips, particularly HBM3E, which are crucial for AI chip functionalities. Samsung also plans to boost its SSD sales, catering to the high demand for AI servers.
Regarding shareholder returns, Samsung declared a 361 won per share dividend for Q2. According to their dividend policy, the total quarterly distribution will amount to approximately 2.45 trillion won and be paid by the end of August. This financial update underscores Samsung’s strong positioning in the AI-driven market landscape. The company continues to adapt and capitalize on evolving technological demands.