Samsung Electronics Profits Surge Due to AI Chip Demand, Shares Rise for the Quarter Ending

Samsung Electronics Profits Surge Due to AI Chip Demand, Shares Rise for the Quarter Ending
Image credit: TechTrends Africa

Samsung Electronics anticipates a remarkable 15-fold increase in profits for the quarter ending June 2024 compared to the same period last year, driven by a surge in artificial intelligence (AI) technology boosting the prices of advanced chips. The South Korean tech giant, the largest global maker of memory chips, smartphones, and televisions, expects its profit to reach 10.4 trillion won ($7.54 billion; £5.9 billion), a significant rise from last year's 670 billion won. This figure surpasses analysts' forecasts of 8.8 trillion won, according to LSEG SmartEstimate.

This optimistic forecast follows a reported more than 10-fold increase in profits for the first three months of the year, and news of the forecast has already pushed Samsung shares up over 2% during early trading in Seoul. Marc Einstein, chief analyst at Tokyo-based research and advisory firm ITR Corporation, highlights the skyrocketing demand for AI chips in data centers and smartphones as a key factor driving this growth. This AI boom has also contributed to a broader market rally over the past year, with the S&P 500 and Nasdaq reaching new records, and Nvidia's market value briefly surpassing $3 trillion.

Despite these positive financial projections, Samsung Electronics, the flagship unit of the Samsung Group, is facing potential labor unrest. A union representing the company's workers has announced a possible three-day strike starting next Monday, demanding a more transparent system for bonuses and time off.