Samsung Electronics Q2 operating profit surges 15 times; chip biz shifts to profit

Samsung Electronics Co. said Wednesday its second-quarter operating profit surged more than 15 times from a year earlier on the robust performance of its semiconductor business.

The world’s largest mobile phone and memory chip maker’s operating profit reached 10.44 trillion won (US$7.54 billion) in the April-June period, compared with 668.5 billion won a year ago, the company said in a regulatory filing.

It is the first time that Samsung Electronics posted an operating profit of more than 10 trillion won in seven quarters since the third quarter of 2022.

Its sales jumped 23.4 percent on-year to 74.06 trillion won and net profit soared 471 percent to 9.84 trillion won.

The earnings exceeded market expectations. The average estimate of operating profit by analysts stood at 10.29 trillion won, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.

Samsung Electronics said it invested 8.05 trillion won in research and development in the quarter ending in June. It also spent 12.1 trillion won in facility investment, including 9.9 trillion won in the semiconductor sector.

The company said its chip business earned 28.6 trillion won in sales for the three-month period through June, with an operating profit of 6.45 trillion won.

It marked the first quarterly operating profit for the company’s flagship business in more than one year as it had remained in the red for five consecutive quarters since the first quarter of 2023.

The strong performance was driven by increasing demand for memory chips, including those for artificial intelligence servers and solid-state drives.

For stable earnings in the memory segment, Samsung Electronics said it will expand sales of the high-performance high bandwidth memory (HBM) products in the second half, particularly the fifth-generation HBM3E, to keep up with booming demand for AI chips.

The company’s fourth-generation HBM3 chips have passed quality tests of U.S. AI chip giant Nvidia Corp., a major player in the artificial intelligence (AI) semiconductor market with its graphics processing units, and its latest HBM3E is expected to follow suit in the second half.

“We plan to actively respond to the demand for high-value-added products for AI and will expand capacity to increase the portion of HBM3E sales,” Samsung Electronics said in a release. “We will also focus on high-density products, such as server modules based on the 1b-nm 32Gb DDR5 in server DRAM.”

Its foundry, or contract chip manufacturing, businesses saw improved earnings in the second quarter as a result of increased demand across applications.

In the second half, Samsung Electronics anticipates the foundry business will experience a rebound in mobile demand and continued high growth in demand for AI and high performance computing applications.

Samsung Electronics’ business for mobile and other devices posted 42.7 trillion won in sales and 2.7 trillion won in operating profit in the second quarter.

The mobile division’s second-quarter sales decreased from three months earlier due to waning demand for smartphones. But sales and shipments of its latest Galaxy S24 series, released in January, outnumbered those of its predecessor, Galaxy S23, both in the second quarter and the first half.

“In the second half of 2024, overall demand for smartphones is expected to increase year-on-year, with increased demand for premium products, driven by growing demand for AI and the launch of new products with innovative features,” the company said.

Samsung Electronics’ TV business also expanded in the April-June period thanks to global sporting events, such as the 2024 Paris Summer Olympics, while its conventional home appliance segment was on a gradual recovery on increasing demand for air conditioners and new products.