Samsung Electronics said on Tuesday that it expects second-quarter operating profit to increase 19-fold from a year earlier, supported by sustained global demand for memory chips used in artificial intelligence (AI) applications.
The South Korean technology giant, the world's largest memory chip manufacturer, estimates operating profit for the April-June period will reach 89.4 trillion won ($58.4 billion), representing a year-on-year increase of 1,810%.
AI demand drives earnings growth
The sharp increase comes amid strong global demand for advanced memory chips used in data centres supporting AI applications.
The expansion of the AI industry has already generated record profits for South Korea's leading semiconductor manufacturers and strengthened workers' demands for improved compensation.
Samsung avoided a major strike in May after reaching an agreement with employees on bonus payments.
Record quarterly performance
Kim Dae-jong, a Business Administration professor at Sejong University, said the forecast represents the highest quarterly operating profit in Samsung's history.
According to Professor Kim, the figure exceeds even the quarterly profits reported by Nvidia, a leading supplier of AI chips.
“If it can maintain this level of performance, Samsung could become the world's largest industrial company,” he told Agence France-Presse.
Market reaction and outlook
Despite the earnings forecast, Samsung shares fell 7% in morning trading, while Seoul's benchmark Kospi index also declined.
Professor Kim said the key question for investors is how long strong demand can be sustained.
“The demand appears secure through next year, but after that nobody knows what will happen,” he said.
Revenue exceeds expectations
According to the Yonhap News Agency, Samsung's earnings forecast exceeded market expectations by 6.2%.
The company also estimates that revenue increased by 129% to 171 trillion won during the quarter.
Samsung is expected to release its full financial results later this month.
Major investment in chip production
Samsung and domestic rival SK hynix are participating in an 800 trillion won public and private investment programme to develop a new semiconductor manufacturing cluster in south-western South Korea.
However, Professor Kim noted that it remains uncertain whether Samsung will be able to maintain current profit levels while the large-scale industrial project is under construction.
Industry risks remain
Some analysts have identified potential delays in AI infrastructure investments as the main risk to the current boom in memory-chip demand.
MS Hwang, an analyst at Counterpoint Research, said there is currently no evidence that the gap between customer demand and supplier production capacity is narrowing.
“Although some data-centre projects involving less competitive players may be delayed, it would be an exaggeration to interpret this as a broad slowdown in AI infrastructure investment,” he said.
As manufacturers prioritise the highly profitable AI market, production of more conventional chips used in devices such as smartphones and laptops has been reduced, creating upward pressure on consumer electronics prices.
Tax revenue boost fuels policy debate
The AI-driven semiconductor boom has also sparked debate in South Korea over how increased tax revenues generated by Samsung Electronics and SK hynix should be used.
A government official said on Sunday that the additional revenue would help finance major projects related to artificial intelligence and the semiconductor industry.
Funding is also expected to support programmes aimed at helping young people purchase homes, launch start-up businesses and secure employment.
Semiconductor jobs gain prestige
The success of the semiconductor sector has further increased the attractiveness of employment at Samsung and SK hynix.
Earlier this year, a photograph of an SK hynix jacket went viral on social media as a symbol of wealth and professional success. Some posts jokingly described it as a “golden ticket” to luxury boutiques and improved personal prospects.
According to Yonhap, jobs at Samsung and SK hynix are now considered so desirable that they have elevated employees' standing in South Korea's so-called marriage market, with perceived desirability levels reportedly matching those associated with doctors and lawyers.
