SAMSUNG Electronics posted its fastest pace of sales and profit growth in years, reflecting a recovery in memory chip demand as AI development accelerates globally.
The world’s largest maker of memory chips and smartphones posted a 15-fold surge in operating profit to 10.4 trillion won (S$9.8 billion) in the June quarter, outstripping analysts’ projections. Sales grew around 23 per cent, the biggest rise since Covid-era highs clocked in 2021. The stock rose 3 per cent to its highest since January 2021.
The results underscore how the US$160 billion memory market is bouncing back this year from a severe post-Covid downturn, driven by a boom in data centres and AI development. That demand pushed average memory chip prices 15 per cent higher from the previous quarter, CLSA estimates, helping Samsung’s largest division reverse losses last year.
Samsung’s depositary receipts in London were up roughly 4 per cent at 9:45 am New York time. The gains sparked a broader rally across the chips sector with Infineon Technologies, STMicroelectronics, ASML Holding, Arm Holdings among the stocks rising.
Both DRAM and NAND prices were lifted by demand for AI servers and enterprise data storage, helping to reverse inventory valuation losses, said Sanjeev Rana, an analyst at CLSA Securities Korea. Samsung’s foundry, or contract chipmaking, operations also got a boost from improved IT demand, he said.
South Korea’s government said this week the country exported the most semiconductors on record in June, driving its trade surplus to US$8 billion – the largest since 2020.
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Samsung is slated to announce final earnings with divisional breakdowns on Jul 31. While the company is benefiting from a broader industry recovery, investors remain concerned about its market position in the newer field of AI chips against SK Hynix.
Its shares have lagged its smaller rival, now the leading supplier of high-bandwidth memory or HBMs, a vital component of AI hardware. It’s struggled to get its latest HBM chips certified by Nvidia, which has become the world’s most valuable chipmaker thanks to insatiable demand for AI accelerators.
Samsung is unveiling results days before union organisers plan to stage a three-day walkout among its 28,000-plus members – including at key chip plants – over a pay dispute. The proposed action follows a strike involving a small number of staff last month that was the first in the company’s 55 years. It’s unclear for now how many employees intend to participate in Monday’s walkout.
Longer term, Samsung’s focus remains on winning more business in AI memory, while at the same time allaying fears of oversupply.
SK Hynix recently reported its fastest pace of revenue growth since at least 2010. That’s propelled a roughly 60 per cent rally in SK Hynix shares since the start of 2024, compared with a gain of about 8 per cent for Samsung’s stock.
Samsung in May unexpectedly named Jun Young Hyun – a memory chip veteran who is returning to the company after leading Samsung SDI – as the new leader of its most important business line, replacing Kyung Kye-hyun.
In previous quarters, solid sales of Samsung’s smartphones helped it ride out sluggish chip demand. South Korea’s biggest company is holding a Galaxy Unpacked event in Paris next week in a bid to sustain momentum for its phones. BLOOMBERG
