Samsung Electronics anticipates a 15-fold jump in its profits for the three months ending in June 2024 compared to the same period last year. This surge is attributed to an artificial intelligence (AI) boom, which has elevated the prices of advanced chips and bolstered the firm’s second-quarter forecast. The South Korean tech giant, known as the world’s largest manufacturer of memory chips, smartphones, and televisions, saw its shares rise by over 2% during early trading hours in Seoul following the announcement.
The company also reported a more than tenfold increase in its profits for the first quarter of this year. For this quarter, Samsung expects its profits to climb to 10.4 trillion won ($7.54 billion; £5.9 billion), up from 670 billion won last year, surpassing analysts’ predictions of 8.8 trillion won according to LSEG SmartEstimate.
“Currently, there’s a significant demand for AI chips in data centers and smartphones,” noted Marc Einstein, chief analyst at Tokyo-based research and advisory firm ITR Corporation. The optimism surrounding AI has contributed to a broader market rally over the past year, leading to new records for the S&P 500 and the Nasdaq in the United States. The market value of chip-making giant Nvidia surpassed $3 trillion last month, momentarily making it the world’s most valuable company.
“The AI boom that significantly boosted Nvidia is also enhancing Samsung’s earnings and those of the entire sector,” added Mr. Einstein. Samsung Electronics is the flagship unit of the South Korean conglomerate Samsung Group. However, the tech company faces a potential three-day strike starting Monday, as a union of workers demands a more transparent system for bonuses and time off.
The expected strike next week could pose a challenge for Samsung Electronics, potentially disrupting its operations and affecting its workforce morale. The union’s demands for a clearer and fairer system for bonuses and time off reflect broader concerns about labor rights and compensation within the tech industry.
Samsung’s impressive financial performance in the first half of 2024 underscores the pivotal role of advanced technology and innovation in driving growth. The company’s ability to capitalize on the AI boom highlights its strategic investments in cutting-edge chip technology and its robust position in the global tech market.
