Samsung’s Q2 Operating Profit Surges 19-Fold on Soaring Chip Demand

Samsung Electronics reported a dramatic 19-fold increase in operating profit for the second quarter of 2024, driven by strong demand and sharply rising prices for memory chips. For the three months from April to June, Samsung’s operating profit reached 89.4 trillion won (approximately 58.44 billion USD), surpassing analysts’ expectations of 87.3 trillion won. This marks a significant rise from 4.7 trillion won in the same period last year and exceeds the company’s cumulative profit over the past three years. Revenue also surged 129% year-over-year to 171 trillion won.

Despite these robust financial results, Samsung’s shares fell in Seoul trading amid investor concerns about the stability of the artificial intelligence (AI) sector bubble and potential cutbacks in U.S. tech companies’ AI infrastructure spending. Rival South Korean chipmaker SK Hynix experienced similar stock declines. Samsung’s profit growth occurred even after allocating a substantial bonus payment to chip production employees, amounting to 10.5% of the division’s operating profit, as part of a wage agreement that averted a major strike in May.

Analysts noted that the strong earnings were largely anticipated and already factored into the stock rally prior to the earnings release. The surge in chip prices, fueled by high demand for AI applications and resulting shortages, underpinned the company’s performance. In response to this demand, Samsung and SK Hynix recently announced a combined investment of $2 trillion to expand chip manufacturing capacity in South Korea. Samsung is scheduled to release its full quarterly financial report, including segment breakdowns, on July 30.