Samsung Electronics’ semiconductor manufacturing facility (Courtesy of Samsung Electronics)
Samsung Electronics Co. on Wednesday reported 10.4 trillion won ($7.5 billion) in operating profit for the second quarter, coming in line with its preliminary results thanks to unwavering demand for its mainstay memory chip products on the ongoing artificial intelligence boom.
Earlier this month, the South Korean chip giant estimated its operating income for the April-June period at 10.4 trillion won, soaring more than 15-fold from the same period of last year and up 58.1% from the previous quarter.
The second-quarter figure beat Samsung’s 2023 full-year operating profit of 6.57 trillion won.
Sales for the cited quarter increased 23.4% year-over-year to 74.1 trillion won, also meeting the guidance figure, according to the company’s regulatory filing this morning.
Its shares opened higher after the earnings announcement and traded up 0.7% at 81,600 won in early trading on Wednesday.
Samsung Electronics attributed the stellar results to a recovery in the memory chip market driven by strong demand for high-end memory products to run both generative AI and general servers.
(Graphics by Dongbeom Yun)
HIGHER MEMORY CHIP PRICES
It reported that its Device Solutions (DS) division, which oversees its chip business, posted 6.5 trillion won in operating profit in the second quarter on sales of 28.6 trillion won.
Earlier this month, analysts forecast the chip business would post 6.5 trillion won-7 trillion won in operating profit in the quarter on higher dynamic random-access memory (DRAM) and NAND chip prices on strong demand.
Samsung said that as demand for its high-performance premium chip products continued rising from AI chipsets, data center servers and devices that run AI services, its sales of high-end chips, such as double data rate 5 (DDR5), server solid-state drive (SSD) and high-bandwidth memory (HBM) chips, jumped last quarter from the first quarter.
Its System LSI division also delivered record-high sales for the first half of this year, the company said, attributing the strong sales to a surge in the supply of key components such as systems on chips (SoCs), image sensors and display driver ICs (DDIs) for major flagship products in the second quarter.
Its Device eXperience (DX), which makes and sells smartphones, displays and appliances, reported 2.7 trillion won in operating profit in the second quarter on sales of 42.1 trillion won, the company announced.
Samsung Electronics’ HBM3E chips (Courtesy of Samsung Electronics)
Mobile device sales dropped from the previous quarter when the company’s new flagship smartphone Galaxy S24 series hit the market.
SOLID DEMAND FROM AI CHIPSETS AND SERVERS IN Q3
The company remains optimistic about its semiconductor business for the rest of this year.
It plans to ramp up HBM chip production to expand the supply of its fifth-generation HBM memory, or HBM3E chips, in the second half of this year, it said.
According to media reports last week, the Korean memory giant has passed Nvidia Corp.’s qualification tests for its fourth-generation HBM, or HBM3 chips, for use in the latter’s AI application processors for the first time.
The report heightened market expectations that Samsung’s HBM3E would also gain the nod from the US AI chipset maker.
It also expects strong foundry orders from the AI and high-performance computing industries for the rest of this year.
The company spent 8.1 trillion won on research and development and 12.1 trillion won in capital expenditures in the second quarter, according to the filing.
By Jeong-Soo Hwang
hjs@hankyung.com
Sookyung Seo edited this article.
