In recent years, the leading manufacturer of memory chips and smartphones, Samsung, has witnessed its most rapid advancement in sales and profit growth, reflecting the surge in demand for memory chips as AI technology develops worldwide. Samsung’s operating profit shot up over 15-fold to an impressive 10.4 trillion Korean Won (€6.9 billion), exceeding market expectations for its preliminary results in the second quarter. Sales escalated by approximately 23%, the largest leap since reaching record highs during the pandemic in 2021. The company is expected to unveil its final earnings, alongside divisional breakdowns on the 31st of July.
On Friday, in the early trading hours in Seoul, the company’s stock increased by 1.7%. These results highlight how the memory market worth €150 billion is making a comeback this year following a devastating downturn after Covid, sustained by a surge in data centres and AI technologies. Average memory chip prices ascended 15% from the past quarter, as per CLSA estimates, enabling Samsung’s largest division to bounce back from losses incurred the previous year.
Industry analyst, Sanjeev Rana from CLSA Securities Korea, explained that both DRAM and NAND prices were boosted due to increased demand for AI servers and corporate data storage, helping to counteract losses in inventory valuations. Samsung’s foundry, or contract chip-making unit, also witnessed a surge due to improved IT demand.
This week, the South Korean government reported that semiconductor exports in June hit record levels, pushing the trade surplus to a whopping $8 billion – a figure not seen since 2020. Yet Samsung, amidst a wider industry recovery, still harbours concerns about its market standing in the emergent field of AI chips against competitor SK Hynix. Samsung’s shares have fallen behind compared to its smaller rival, now the top provider of high-bandwidth memory, a key component of AI hardware. The company has met challenges acquiring certification for its latest HBM chips from Nvidia, the world’s most valuable chip manufacturer due to skyrocketing demand for AI accelerators.
Samsung plans to reveal its results a few days prior to union organizers proposing a three-day strike over a pay disagreement among its over 28,000 members – including those at vital chip manufacturing plants. This possible action comes in the wake of a strike involving a small group of employees last month, marking the company’s first strike in its 55-year history. It is yet unclear how many employees plan to participate in the walkout on Monday.
In the future, Samsung will continue concentrating its efforts on winning more contracts in the AI memory sector, and concurrently addressing oversupply worries. Samsung’s response to its competitor, SK Hynix, has stirred escalating assets holders’ apprehensions. Recently, SK Hynix recorded its most accelerated earnings growth since at least 2010, catapulting a near 60% rise in stocks since the onset of 2024, in comparison to Samsung’s around 8% boost. In an unforeseen move, Samsung announced Jun Young Hyun in May, an experienced memory chip professional who rejoined the firm after heading Samsung SDI Co., as the fresh leader of its crucial business division, resulting in Kyung Kye-hyun stepping down, as reported by Bloomberg.