SEOUL: Samsung Electronics has forecast a massive rise in second-quarter operating profit, driven by strong global demand for advanced memory chips used in artificial intelligence (AI) data centres.
The South Korean technology giant estimated its April-June operating profit at 89.4 trillion won ($58.4 billion), marking a 1,810 percent increase compared to the same period last year, according to a company statement.
The forecast would represent a 19-fold jump in operating profit and the company’s highest quarterly profit ever.
Samsung, the world’s largest memory chipmaker, has benefited from the rapid expansion of AI technology, with demand for high-performance memory chips helping South Korean semiconductor companies record strong earnings this year.
Business administration professor Kim Dae-jong of Sejong University said Samsung’s expected profit could surpass the quarterly earnings of AI chip leader Nvidia.
“If it can sustain this level of performance, Samsung could become the world’s leading manufacturing company,” Kim told AFP.
However, Samsung shares dropped seven percent in morning trading, while South Korea’s benchmark Kospi index also declined.
Kim said the major challenge ahead would be the sustainability of memory chip demand.
“The key question going forward is how long memory demand will last. Demand is essentially secured through next year, but beyond that, no one really knows,” he said.
AI chip investment continues
Samsung’s profit estimate exceeded market expectations by 6.2 percent, according to South Korea’s Yonhap News Agency, citing its own data firm.
The company expects revenue to rise 129 percent to 171 trillion won. Samsung is scheduled to release its final earnings report later this month.
Samsung and domestic rival SK hynix are also participating in an 800 trillion won public-private investment project aimed at building a new semiconductor manufacturing hub in southwestern South Korea.
Analysts have warned that delays in AI infrastructure investment could pose risks to the current memory chip boom.
However, MS Hwang, an analyst at Counterpoint Research, said there was no clear sign that supply capacity was catching up with customer demand.
“While some data centre projects associated with less competitive players may be delayed, it would be an exaggeration to interpret this as a broad slowdown in AI infrastructure investment,” Hwang told AFP.
As chipmakers focus on the more profitable AI sector, production of conventional chips used in smartphones, laptops and other consumer electronics has declined, contributing to higher device prices.
AI boom boosts tax revenue debate
South Korea’s AI semiconductor boom has also sparked discussions over how to use increased tax revenue generated by the success of Samsung Electronics and SK hynix.
Presidential chief of staff Kang Hoon-sik said the additional revenue would help fund large-scale projects focused on AI and the semiconductor industry.
He added that the funds could also support young people through housing assistance, startup opportunities and employment programmes.
The growing reputation of semiconductor companies has also increased their appeal among job seekers. An SK hynix jacket became a viral symbol of wealth and success in South Korea, with online posts portraying it as a sign of status.
According to Yonhap, citing matchmaking agency Sunoo, jobs at Samsung and SK hynix have seen their “desirability indices” rise to levels comparable with professions such as doctors and lawyers.
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