Samsung Electronics is making a strong comeback in the semiconductor business, with expectations of a 15-fold increase in its second-quarter operating profit compared to the same period last year. The surge in profits is attributed to the widespread adoption of artificial intelligence (AI), leading to a significant demand for advanced computer chips. This demand has driven up the prices of advanced chips, contributing to Samsung's forecast for the second quarter. The company's stock prices have also seen a significant increase, reaching their highest level since January 2021. The AI boom has not only boosted Samsung's earnings but has also had a positive impact on the entire sector, as evidenced by the market value of chip-making giant Nvidia surging past $3 trillion. Samsung's strong performance in the second quarter, its best in two years, is expected to raise morale after a challenging 2023. The company's memory chips, commonly found in various consumer devices, are experiencing a rebound in prices, particularly high-bandwidth memory (HBM) used in data centers, which is in high demand due to AI. Samsung's turnaround in its chip division, with operating income jumping 900% from a year ago in the first quarter, has contributed significantly to the profit surge. The chip division is expected to have been the primary contributor to the operating income in the second quarter, with the smartphone business unit also making a substantial contribution. The company is set to publish its full earnings report at the end of the month. In addition to the strong second-quarter performance, Samsung is planning to start mass production of HBM3E in the third quarter and has a deal with Nvidia on the horizon. The company's optimistic outlook is further supported by the expectation of continued strong demand for HBM throughout the year. However, Samsung is also facing potential challenges, as a union of workers is planning a possible three-day strike, demanding a more transparent system for bonuses and time off. Overall, Samsung Electronics is poised to regain its position in the semiconductor market, driven by the AI boom and the surge in demand for advanced computer chips, with its second-quarter performance signaling a promising turnaround for the company.
