Samsung’s profit jumps as AI drives recovery in memory chips

The world’s largest maker of memory chips and smartphones said operating profit grew more than 15-fold to 10.4 trillion won (US$7.5 billion) in its preliminary results for the June quarter, outstripping market projections.

Sales grew around 23 per cent, the biggest rise since Covid-era highs clocked in 2021. Samsung is slated to announce final earnings with divisional breakdowns on July 31.

Samsung’s stock gained 1.7 per cent during early morning trade in Seoul on Friday.

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 year-earlier losses.

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 chip-making, 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.

Investors have become increasingly concerned about Samsung’s response to SK Hynix, which recently reported its fastest pace of revenue growth since at least 2010. That has 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 is unveiling results days before union organisers plan to stage a three-day walkout among its 28,000-plus members – including at key chip