Samsung Electronics Co. has reported a remarkable surge in sales and profit, marking the fastest pace of growth in years and signaling a robust recovery in the memory chip sector. The world’s leading manufacturer of memory chips and smartphones recorded a 15-fold increase in operating profit, reaching 10.4 trillion won ($7.5 billion) for the quarter ending in June. This figure surpassed analysts’ expectations and was accompanied by a 23% rise in sales, the most significant growth since the peak of the COVID-19 pandemic in 2021. Following the announcement, Samsung’s stock climbed 3%, reaching its highest level since January 2021.
The impressive results highlight a significant rebound in the $160 billion memory market, which is recovering from a severe downturn experienced post-COVID. The surge in demand for data centers and AI development has driven up the average memory chip prices by 15% from the previous quarter, according to CLSA estimates. This recovery helped Samsung’s largest division turn around from the losses incurred last year.
Samsung’s gains also triggered a broader rally across the semiconductor sector. Companies such as Infineon Technologies AG, STMicroelectronics NV, ASML Holding NV, and Arm Holdings Plc saw their stocks rise in response.
Analysts attribute the growth in both DRAM and NAND prices to the increased demand for AI servers and enterprise data storage. Sanjeev Rana, an analyst at CLSA Securities Korea, noted that Samsung’s foundry operations also benefited from improved IT demand. The South Korean government reported record semiconductor exports in June, contributing to the country’s largest trade surplus since 2020.
Despite the positive earnings, investors are concerned about Samsung’s position in the emerging AI chip market. SK Hynix Inc., Samsung’s smaller rival, has become the leading supplier of high-bandwidth memory (HBMs), essential for AI hardware. Samsung has struggled to get its latest HBM chips certified by Nvidia Corp., the world’s most valuable chipmaker due to high demand for AI accelerators.
Looking ahead, Samsung is focused on expanding its presence in AI memory while addressing concerns of potential oversupply. The company recently appointed Jun Young Hyun, a memory chip veteran, to lead its crucial business line, replacing Kyung Kye-hyun. Samsung is also preparing for a Galaxy Unpacked event in Paris, aiming to maintain momentum in its smartphone segment.
However, the company faces labor challenges, with union organizers planning a three-day walkout over a pay dispute. This follows a smaller strike last month, the first in Samsung’s 55-year history. The extent of participation in the upcoming strike remains uncertain.
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