By Heekyong Yang, Joyce Lee and Hyunjoo Jin
SEOUL, July 7 (Reuters) – Samsung Electronics on Tuesday forecast a 19-fold jump in second-quarter operating profit from a year earlier, surpassing its combined earnings over the past three years as it rides an AI boom that has driven up memory prices.
The world’s largest memory chipmaker estimated April-June operating profit at 89.4 trillion won ($58.44 billion), beating an LSEG SmartEstimate of 87.3 trillion won, according to a regulatory filing. It reported a profit of 4.7 trillion won a year earlier.
Revenue would likely rise 129% to 171 trillion won from a year earlier, it said.
Memory prices continued to climb during the quarter as AI spending broadened beyond high-bandwidth memory (HBM) into conventional DRAM and NAND products.
Samsung’s profit surged even as it set aside funds for sizeable bonuses to its semiconductor workers, as agreed in a wage deal in May linking their pay to operating profit.
“Samsung posted better-than-expected earnings despite bonus-related provisions, as memory prices rose sharply,” said Lee Min-hee, an analyst at BNK Investment & Securities.
Without those provisions, its operating profit would likely have exceeded 100 trillion won, analysts said.
Samsung shares, which have soared fivefold over the past year, fell 4.7% in morning trade after the earnings guidance announcement.
Analysts said rapid growth in HBM production has tightened supply of conventional memory products used in smartphones, PCs and enterprise servers, further supporting prices.
Citi Research last week said average selling prices for DRAM and NAND rose 44% and 53% quarter-on-quarter, respectively, in the second quarter.
Analysts also said customers are increasingly seeking longer-term supply agreements, reinforcing expectations that memory prices will remain elevated for longer and benefiting manufacturers such as Samsung with large-scale production capacity.
While Samsung’s memory business is expected to post another quarter of strong earnings, analysts said losses at its foundry and logic chip (LSI) businesses are likely to widen because bonus expenses are allocated across the semiconductor division.
Samsung said it plans to announce detailed results on July 30, including a breakdown of earnings of each of its business divisions.
RISKS ON THE HORIZON
Looking ahead, however, analysts said the biggest risk to the memory boom would be a slowdown in AI infrastructure investment. Delays in U.S. data centre construction caused by labour shortages, power constraints or local opposition could eventually weaken demand across the AI hardware supply chain.
However, while memory has historically been characterised by boom-and-bust cycles, some analysts argue the current sustained growth is becoming more structural as AI demand outpaces the industry’s ability to expand production. Building new memory fabrication plants takes years, limiting supply growth even as hyperscale companies continue to ramp up AI investment.
Samsung last week announced plans to invest 2,100 trillion won in South Korea through 2040, but said spending would be adjusted according to market conditions and business needs
($1 = 1,529.8100 won)
(Reporting by Heekyong Yang and Joyce Lee; Editing by Sonali Paul)
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