Samsung Forecasts Strongest Quarterly Profit in Three Years Amid AI Chip Demand
- tech360.tv
- 9 hours ago
- 2 min read
Samsung Electronics on Tuesday projected a 32% rise in its third-quarter operating profit compared to a year earlier. This forecast surpassed analysts' estimates, driven by strong demand for conventional memory chips, which mitigated weaker high bandwidth memory chip sales.
The world's largest memory chipmaker estimated an operating profit of 12.1 trillion won (USD 8.5 billion) for the July-Sept. period. This figure would mark Samsung's highest quarterly profit in over three years, significantly exceeding a 10.1 trillion won LSEG SmartEstimate.
Samsung's third-quarter results highlighted robust demand for server and AI-related chips. This demand has increased prices and shipments of conventional DRAM and NAND products.
Ryu Young-ho, a senior analyst at NH Investment & Securities, noted that the third-quarter earnings surprise originated from the chip business.
Analysts stated that while progress in supplying advanced high bandwidth memory chips to major clients, including Nvidia, was slower than anticipated, gains in commodity memory, bolstered by tight supplies, helped lessen the impact.
Ryu added that chip sales remained strong due to higher prices and increased shipments, with high bandwidth memory products constituting a larger share within memory. The foundry unit also reduced its losses as improved utilisation rates helped alleviate fixed-cost pressures.
A filing indicated that revenue would likely increase 8.7% to 86 trillion won from a year earlier.
Samsung is expected to release detailed results, including a breakdown of earnings for each of its businesses, on Oct. 30.
Samsung's shares have rallied 75% to reach record highs this year.
Analysts noted that memory makers' recent focus on investing in advanced chips may have limited the production of conventional chips. This could extend a supply shortage and subsequently drive price increases for chips essential in AI servers.
According to TrendForce data, prices of some DRAM chips, extensively used in servers, smartphones, and PCs, surged 171.8% in the third quarter compared to a year earlier.
Following the success of OpenAI's ChatGPT, major technology companies have established longer-term plans. These plans involve expanding spending on AI-related investments, including data centres and servers capable of managing the increasing workloads from AI services.
While recent chip supply deals with major technology companies, such as Tesla and OpenAI, eased investor concerns about Samsung, analysts cautioned that uncertainties persist. These include potential U.S. tariffs that could harm chip demand, an intensifying trade war between the U.S. and China, and China's tightened export controls on rare earth materials used in advanced chips and manufacturing equipment.
Samsung Electronics projects a 32% rise in Q3 operating profit, reaching 12.1 trillion won (USD 8.5 billion).
This forecast represents Samsung's highest quarterly profit in over three years, surpassing analysts' estimates.
Strong demand for server and AI-related chips, especially conventional DRAM and NAND products, drove the profit increase.
Source: REUTERS
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