Samsung predicts a 15-fold profit increase on the back of booming AI chip demand

Samsung Electronics, the world's leading memory chipmaker, is anticipating a massive profit jump fueled by surging demand for artificial intelligence (AI) chips. In a preliminary report for the second quarter of 2024, the company predicts a staggering 15-fold increase in profits compared to the same period last year.

Analysts attribute this dramatic rise to a significant uptick in the global market for memory chips, particularly high-bandwidth memory (HBM) chips. These advanced chips are considered essential for powering the most demanding AI applications, such as large language models and powerful AI accelerators.

"Enterprises currently have an insatiable thirst for DRAM, in particular the more advanced high-bandwidth memory chips that are viewed as essential for AI," said analysts familiar with Samsung's performance.

This news comes as a welcome boost for Samsung, which has benefited from the ongoing global chip shortage. The company's memory chip business is its largest and most profitable segment, and its fortunes are directly tied to demand for these components.

While Samsung hasn't provided specific figures, analysts predict a second-quarter profit of around 10.4 trillion won (approximately $7.55 billion), significantly exceeding analyst expectations of 8.8 trillion won. This would mark Samsung's highest profit since the third quarter of 2022, a period fueled by the pandemic-driven surge in electronics demand.

Samsung's dominance in the memory chip market positions it to capitalize on the burgeoning AI industry. As companies invest heavily in AI research and development, the demand for high-performance chips like HBM is expected to continue its upward trajectory.

However, some experts caution that the global chip shortage could still pose challenges. While production capacity is increasing, it may not completely keep pace with demand, potentially leading to price fluctuations.