South Korean tech giant Samsung Electronics said its profit has risen by nearly 1,800% — almost 19 times higher than before — due to surging global demand for memory chips used in artificial intelligence (AI) technology. The company forecast operating profit of 89.4 trillion won for the three months from the start of April through the end of June — equivalent to roughly £43.6 billion or $58.4 billion. This marks the third consecutive quarter in which Samsung has posted record operating profit. Major South Korean companies typically release earnings guidance ahead of their detailed financial reports to give investors a sense of performance.
The forecast, released on Tuesday, comes ahead of full financial results due later this month. It shows chip prices have risen significantly as semiconductor demand continues to outstrip supply. Samsung’s earnings guidance said sales for the quarter were approximately 171 trillion won, more than double the same period last year. Mark Einstein, an analyst at market research firm Counterpoint Research, called it one of the best quarterly financial results in Samsung’s history, saying it comes close to the record Nvidia set earlier this year.
He said the credit belongs entirely to the rise of the AI-driven market. Memory chip makers are reaping enormous benefits from limited supply and unprecedented demand. With the supply crunch persisting, Samsung has also raised the price of its memory chips. Market research firm IDC said the demand for semiconductors driven by data centers and AI infrastructure is unlike anything the memory industry has seen before, which is also affecting chip supply for everyday consumer electronics. IDC technology analyst Bryan Ma said there is no sign of AI data center demand slowing, so the firm expects chip supply to remain constrained throughout the coming year.
Samsung is one of the world’s largest semiconductor manufacturers, producing chips for companies including Nvidia and Google alongside its own range of electronics products. Share prices of major tech companies have risen rapidly in recent months amid soaring demand for AI chips. However, Samsung’s shares fell more than 8% on the Seoul stock exchange on Tuesday, as many investors had expected even higher profit. Even so, Samsung’s market value has more than doubled since the start of this year. South Korean rival SK Hynix has seen its market value rise by more than 200% over the same period. The strong performance of both companies has driven South Korea’s main stock index, the KOSPI, up more than 80% this year.
In May, Nvidia announced record quarterly sales and profit, with revenue for the January-March period exceeding $80 billion. However, Nvidia’s share price fell at the time, with many analysts attributing investor concern to fears of rising competition in the AI chip market. In June, the South Korean government announced plans to invest at least $88 billion in various projects led by Samsung and SK Hynix over the coming years to boost the country’s chip production capacity. Meanwhile, rival tech firms in Japan, China and Taiwan are also investing heavily in new chip plants to meet the rapidly growing demand for AI chips.
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