Samsung Electronics posts $7.5bn in Q2 OP on strong memory chip sales

[Photo by Lee Seung-hwan]

Samsung Electronics Co., the world’s memory chipmaker, saw its operating profit soar to more than 10 trillion won ($7.5 billion) for the first time in seven quarters in the April-June period on the back of chip industry recovery and robust sales of artificial intelligence (AI)-use memory chips.

In a preliminary earnings report released on Friday, Samsung Electronics estimated its operating profit reached 10.4 trillion won in the second quarter, up 1,452.24 percent from the same period a year ago.

Sales were up 23.31 percent to 74 trillion won.

The operating profit is 2.1 trillion won higher than the market consensus presented by Yonhap Infomax. It is also the first time in seven quarters that Samsung Electronics achieved over 10 trillion won in quarterly operating profit.

The surge is largely attributed to the recovery in the semiconductor industry, particularly in memory chips, which began in the first quarter.

The device solutions (DS) division, which struggled due to the sluggish industry, logged an operating loss of 4.5 trillion won in the first quarter of 2023. The division suffered nearly 15 trillion won in operating loss over the past year.

The poor performance of the division led Samsung Electronics’ operating profit to hover below 1 trillion won in the first quarter and second quarter of last year.

Market analysts, however, anticipate the device solutions division‘s operating profit in the second quarter to range between 4 trillion and 5 trillion won, more than double the previous quarter’s performance.

The division managed to escape from quarters of losses in the first quarter of 2024.

The solid performance is estimated to have been led by strong memory chip business.

Earnings have improved on the back of rising DRAM and NAND memory chip prices and increased sales of high value-added products. Inventory has also improved, according to observers.

[Graphics by Song Ji-yoon]

According to market analysis firm TrendForce, DRAM prices in the second quarter are projected to have risen by 13~18 percent while NAND prices by 15~20 percent.

In the third quarter, DRAM prices are projected to increase by 8~13 percent and NAND prices by 5~10 percent.

High demand for corporate-use solid state drives that are applied to servers, HBM, and DDR5 are expected to have played a pivotal role in achieving strong performance in the second quarter amid high demand for AI-use chips.

Market insiders project Samsung Electronics will be able to post 310 trillion won in annual sales and 40 trillion won in operating profit in 2024.

Last year, Samsung Electronics posted 258.9 trillion won in sales and 6.5 trillion won in operating profit.

The company’s final second-quarter results, in the meantime, including earnings by business division, will be announced on July 31.