Samsung sees 15 times higher profits

Samsung sees 15 times higher profits

Samsung expects much higher profits for the second quarter of this year compared to 2023. The as much as fifteen times higher profit is mainly due to strong interest in its High-Bandwidth Memory (HBM) chips for AI applications.

According to the quarterly figures, operating profit for the three-month period was 10.4 trillion South Korean won, about 7.1 billion euros. This is better than the expected operating profit of 8.8 trillion won. Last year, profits for the same period stood at 670 billion won. This is now the highest profit since the third quarter of 2022.

Sales for the past quarter totalled 74 trillion won. In the second quarter of 2023, sales still totalled 60.4 trillion won.

Demand for HBM chips

The tech giant indicates that the 15-fold expected profit is mainly due to demand for chips. In particular, dedicated HBM chips are in demand. These specialized HBM chips are mainly used for AI solutions. The demand for HBM chips is obviously booming due to the current AI hype. HBM chips are used alongside GPUs or AI accelerators to enable especially large LLMs, think GPT-4 and the Google Gemini LLMs.

Although Samsung does not give specific figures on the profits generated by HBM chips, analysts estimate them to total about 4.6 trillion won.

Disappointing smartphone sales

Although Samsung’s chip business is rising, the tech conglomerate may be worried about another well-known component. Recent preliminary quarterly figures show that smartphone sales are yielding lower results.

In the second quarter of this year, the smartphone business reportedly recorded about 2.2 trillion in operating profit. That is less than the 3.04 trillion won in the same period in 2023.

Perhaps a number of factors contribute to the lower profit. For example, more expensive smartphone parts and higher marketing and development costs for the AI features that the South Korean smartphone maker is infusing into its portfolio in its higher-end models. Smartphone sales also remain flat compared to the same period last year.

Also read: Samsung falls behind in HBM race: memory fails Nvidia’s tests