Samsung Electronics Co. saw its shares reach a three-year high after forecasting a 15-fold increase in its second-quarter operating profit, driven by a surge in demand for memory chips due to the acceleration of AI development globally. The company's operating profit for the June quarter is expected to be 10.4 trillion won ($7.5 billion), a significant increase from the previous year and surpassing analysts' projections. This surge in profit is attributed to a recovery in memory chip demand and a 23% increase in sales, the largest rise since the Covid-19 era. Samsung is aiming to regain its competitive edge in the semiconductor business, particularly in high-bandwidth-memory products. The company's stock rose by 3% to its highest level since January 2021. The expected operating profit beat estimates, and the firm also anticipates revenue for the second quarter to be between 73 trillion to 75 trillion won, reflecting a substantial increase from the previous year. The recovery in the memory chip market is attributed to AI optimism, with memory chips being widely used in consumer devices such as smartphones and computers. Samsung's strong performance is also linked to the growing demand for servers and DRAM, prompting a surge in prices. The company's guidance indicates a significant jump in revenue and profit, with memory chips being a high-margin product in high demand due to the interest in generative AI. The surge in demand for servers is expected to continue, driven by new manycore processors from AMD and Intel, which are predicted to spark a wave of fleet refreshes. Overall, Samsung's robust performance in the second quarter is a result of the recovery in memory chip demand, driven by AI development, and the company's efforts to regain its position in the semiconductor market. The surge in profit and revenue reflects the strong demand for memory chips and servers, with AI development playing a significant role in driving this growth.
