Samsung Forecasts AI-Driven Chip Demand Surge Amid Q2 Profit Boom

Samsung Electronics has reported a substantial increase in its second-quarter operating profit, with earnings rising more than 15-fold compared to the same period last year. This significant boost is primarily attributed to the rebounding semiconductor prices, fueled by the growing demand for artificial intelligence (AI) technologies.

The South Korean tech giant, founded in 1969, has long been a leader in the global electronics market. Samsung became the world's largest manufacturer of memory chips in 1992, and this division has once again emerged as the company's primary profit driver. The chip segment reported a profit of 6.45 trillion won, its highest since the second quarter of 2022.

Looking ahead to the second half of 2024, Samsung anticipates that AI servers will dominate a larger portion of the memory market. The company stated, "Major cloud service providers and enterprises are expected to expand their AI investments, driving demand for specialized memory chips."

The surge in demand for high-end DRAM chips, particularly high bandwidth memory (HBM) chips used in AI applications, has contributed significantly to the rising chip prices. Samsung reported that its HBM revenue increased by approximately 50% from the previous quarter.

However, the company faces challenges in meeting the standards set by Nvidia, the leading AI chip manufacturer, for its latest generation of HBM chips. Despite this, Samsung has set an ambitious target, forecasting that its HBM3E chips will account for 60% of its HBM sales by the fourth quarter of 2024.

As Samsung focuses on producing memory chips for AI applications, the supply of conventional PC and mobile memory chips is expected to be constrained in the latter half of the year. This shift in production priorities reflects the company's adaptation to the evolving tech landscape, reminiscent of its transition from producing its first black-and-white television in 1970 to entering the semiconductor business in 1974.

While the chip division flourished, Samsung's mobile devices business experienced a decline in operating profit. However, the company remains optimistic about the future of its smartphone segment. Samsung anticipates an increase in overall demand for smartphones in the second half of 2024, particularly for premium products featuring AI functions.

Samsung's journey in the mobile phone industry began in 1988 with the introduction of its first mobile phone. The company has since become a dominant player in the smartphone market, launching its flagship Galaxy S series in 2010 and introducing its first foldable smartphone in 2019.

As Samsung continues to navigate the rapidly evolving tech landscape, its ability to adapt and innovate across various sectors, from semiconductors to consumer electronics, will be crucial in maintaining its position as a global leader in the industry.