Samsung has forecast a rise in second-quarter profit as the global memory chip market continues its recovery driven by the rise of AI.
The South Korean tech giant said in its preliminary earnings forecast on Friday that it estimates operating income of 10.4 trillion won in the quarter, up 1,452 percent from a year earlier. Revenue also rose 23.31 percent over the same period to 74 trillion won.
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The profit surge continues a turnaround for Samsung’s chip division, which began last quarter when it saw operating income grow 900% from a year earlier. The chip division’s return to profitability after five previous quarters in the red directly contributed to that jump.
In the second quarter, the company’s chip division is expected to have done the heavy lifting, contributing about half or more of operating income, according to South Korean analysts.
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DRAM and NAND memory prices have been rising steadily since the end of last year. DRAM, especially high-bandwidth memory (HBM), which is used in data centers, is in particularly high demand thanks to AI.
Meanwhile, Samsung’s smartphone business unit is expected to have contributed about 2 trillion won of the total operating income. The company will announce its full earnings report at the end of the month.
The strong second-quarter performance, the best in two years, will undoubtedly boost morale at Samsung after a dismal 2023, and things are only going to get better.
Demand for HBM is expected to be strong throughout the year and the company has an agreement with Nvidia on the horizon. Samsung has announced that it plans to start mass production of the HBM3E in the third quarter. In addition to this continued increase in chip demand, Samsung is also planning to unveil its new foldable devices next week, which will provide a further boost to its profits.