Samsung Electronics says Q2 operating profits soar to $7.5 billion

Samsung Electronics on Wednesday reported that operating profits for the second quarter soared $7.5 billion on-year – Copyright AFP ANTHONY WALLACE

Samsung Electronics said Wednesday that its operating profits soared fifteen-fold to $7.5 billion for the second quarter, as chip prices bounce back and demand for generative AI continues to grow.

The world’s largest memory chip maker posted an “operating profit of 10.44 trillion (Korean won) as favorable memory market conditions drove higher average sales price”, it said in a statement. 

It added that “robust sales of OLED panels also contributed to the results.”

The figure is a 1,462.29 percent jump from 670 billion won in the April-June period a year earlier, exceeding market expectations.

Sales rose 23.4 percent to 74 trillion won, Samsung said.

The firm is the flagship subsidiary of South Korean giant Samsung Group, by far the largest of the family-controlled conglomerates that dominate business in Asia’s fourth-largest economy.

Semiconductors are the lifeblood of the global economy, used in everything from kitchen appliances and mobile phones to cars and weapons.

And demand for the advanced chips that power AI systems has skyrocketed thanks to the success of ChatGPT and other generative AI products.

Samsung is one of only a handful of companies worldwide that manufacture premium high-bandwidth memory (HBM) chips tailored for artificial intelligence processors.

Samsung said in a statement that they would “actively respond to the demand for high-value-added products for AI and will expand capacity to increase the portion of HBM3E sales.” 

Earlier this month, the company showcased the deployment of AI across a range of its consumer electronic products — including high-end health wearables — as it seeks to extend its leadership in global smartphone sales.

– Semiconductors, strikes –

Semiconductors are South Korea’s leading export and hit $13.4 billion in June, their highest level yet, accounting for a fifth of South Korea’s total exports, according to figures released by the country’s customs service.

In April, the United States announced grants of up to $6.4 billion to Samsung to produce cutting-edge chips in Texas.

That same month, industry tracker International Data Corporation (IDC) said Samsung regained its position as the top smartphone seller, wresting back the lead from Apple.

Samsung’s solid earnings come even as a union representing tens of thousands of workers at Samsung Electronics is staging a so-called “indefinite” strike in a bid to force management to negotiate on wages and benefits.

Thousands of workers joined the strike at the outset, although it is unclear exactly how many people continue to abstain from working.

Samsung has told AFP that the company “will ensure no disruptions occur in the production lines.” 

But the union claims the work stoppage has had an impact. 

“We’re getting reports from our members that it is affecting production, but our members are afraid to come out and report it,” Lee Hyun-kuk, vice president of the National Samsung Electronics Union, told AFP.

“The reason we are striking is clear, and we just want the company to bring suggestions that respect workers,” he added. 

Samsung shares were up 1.2 percent in morning trade in Seoul.