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AI expectation boosts Samsung's Q2 profit

Translate from : AI-forventning øger Samsungs Q2 overskud

Samsung Electronics is expected to post a 13-fold increase in its second-quarter profit from a year earlier, as demand for artificial intelligence technology drives a recovery in memory chip prices. Operating profit for the world's largest maker of memory chips, smartphones and TVs likely rose to 8.8 trillion won ($6.34 billion) in the quarter ended June 30, according to an average LSEG SmartEstimate of 27 analysts.

These estimates are aligned to analysts that are most consistent and accurate. This amount would be Samsung's highest profit since the third quarter of 2022. It is equivalent to an operating profit of 670 billion won in the second quarter of last year. Performance in the tech giant's main semiconductor division is expected to have continued to improve its second-quarter profit as memory chip prices continue to rise from a temporary slump from mid-2022 to late 2023 caused by weak post-pandemic demand for gadgets that use the chips .

Explosive demand for high-end DRAM chips, such as high-bandwidth memory (HBM) chips used in AI chipsets, as well as chips used in data center servers and gadgets that run AI services, is supporting a broad recovery in the chip industry, analysts say . In the second quarter, memory chip prices rose about 13% to 18% over the previous quarter for DRAM chips used in technology devices and 15% to 20% for NAND Flash chips used in data storage, according to data provider TrendForce.

Estimated Q2 operating profit at Samsung's chip division was 4.6 trillion won, according to an average of 10 analysts' forecasts. This compares with a loss of 4.36 trillion won for the same period last year. Its mobile business likely saw its second-quarter operating profit shrink from last year, despite shipping a similar number of smartphones, analysts say.

This is due to steeper costs for parts and higher marketing and development costs for AI services. The mobile business is expected to have reported an operating profit of about 2.2 trillion won, according to an average of forecasts from 10 analysts, down from a profit of 3.04 trillion won a year ago. Samsung is expected to compete with rival Apple in the top segment when it launches its latest flagship phones and mobile accessories, including a new health-monitoring ring, on July 10 in Paris.