Samsung's Net Profit Surges Nearly Sixfold on Strength in Chip Business — Update

By Kwanwoo Jun

Samsung Electronics reported a nearly sixfold increase in net profit for the second quarter, with its semiconductor business generating more than half of overall operating profit as the artificial-intelligence boom continues to fuel demand for advanced chips.

The world's largest maker of memory chips and smartphones forecast that demand for high-end AI chips, especially for data servers and cloud-computing services, will remain strong through the second half of 2024.

Net profit soared to 9.841 trillion won, equivalent to $7.11 billion, from 1.724 trillion won a year earlier, the South Korean technology giant said Wednesday. Profit rose 46% from the previous quarter.

That beat a FactSet-compiled consensus estimate of 8.228 trillion won.

Revenue for the quarter rose 23% to 74.068 trillion won and operating profit increased almost 16-fold to 10.444 trillion won, largely in line with the company's preliminary estimates.

The company's chip-making business posted 6.450 trillion won in operating profit for the period, accounting for about 62% of its total quarterly operating income.

Brisk demand for high-bandwidth memory, double-data rate 5 and solid-state drive products continued driving strong earnings growth in the second quarter, Samsung said. The tech giant's memory-chip business had swung to a profit in the first quarter of 2024 after four straight quarters of losses.

The company said it invested 8.05 trillion won in research and development during the second quarter, enhancing its overall HBM production capability while aiming to sell more advanced HBM3E products.

Samsung's intensified HBM push came amid media reports that U.S. AI chip giant Nvidia cleared its HBM3 products for use in H20 processors, though its next-generation HBM3E products were still being tested for use in high-end H100 processors. Samsung declined to comment on such reports.

Samsung aims to catch up with smaller Korean rival SK Hynix, which started mass production of the advanced chips in March to supply Nvidia. Shares in SK Hynix, viewed as a beneficiary of the AI boom, have risen some 34% this year, compared with Samsung's gain of about 4%.

Still, the AI frenzy gave Samsung a tailwind for its smartphone and home-appliance segment. Shipments of its mobile handsets and consumer electronics rose in the June quarter after the launch of devices with AI features earlier this year, it said.

Samsung retained its title as the top mobile-handset supplier with a 0.7% rise in smartphone shipments to 53.9 million units, surpassing Apple's 45.2 million units for the quarter, according to preliminary data from market research firm International Data Corp.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com

(END) Dow Jones Newswires

July 30, 2024 22:35 ET (02:35 GMT)

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