Samsung expects 1400% growth in profit as AI booms

Samsung Electronics anticipates a 1400% increase in profits for the second quarter of 2024, boosted by an artificial intelligence (AI) surge that has propelled the prices of advanced chips.

The South Korean tech giant, the world’s leading manufacturer of memory chips, smartphones, and televisions, saw its announcement drive Samsung shares up by over 2% in early trading hours in Seoul on Friday.

The announcement comes after the firm reported a significant increase in profits, more than 10 times higher than the previous year, for the first three months of 2024. It now anticipates its quarterly profit to reach 10.4 trillion won ($7.54 billion), up from 670-billion-won last year, surpassing analysts’ expectations of 8.8 trillion won as per LSEG Smart Estimate.

“Right now we are seeing skyrocketing demand for AI chips in data centers and smartphones,” Marc Einstein, chief analyst at Tokyo-based research and advisory firm ITR Corporation, told the BBC.

Strike looms

The recent wave of enthusiasm for AI has been a key driver of the broad market uptrend seen in the past year. This positive sentiment has propelled both the S&P 500 and Nasdaq to reach unprecedented highs since Wednesday, July 3rd.

Nvidia, a prominent player in semiconductor manufacturing, witnessed its market capitalization surpass $3 trillion last month, briefly securing its position as the world’s most valuable company.

Mr Einstein added that “The AI boom which massively boosted Nvidia is also boosting Samsung’s earnings and indeed those of the entire sector.”

However, Samsung Electronics, the most important subsidiary of the giant South Korean company Samsung Group, might be facing a disruption in their work schedule.

According to the BBC, the company’s employees are organized in a union, and this union is unhappy with the current system for deciding bonuses and time off. To express their dissatisfaction, they are planning a three-day strike that is scheduled to begin next week.