South Korean multinational manufacturing conglomerate Samsung, has reported a staggering increase in its second quarter (Q2) operating profit, driven by robust demand for Artificial Intelligence (AI) technologies.
The tech giant’s financial results surpassed market expectations, highlighting its strong performance amidst a growing AI sector. The revenue for the quarter was 74.07 trillion Korean won (KRW), a 23.42% increase from a year earlier, while operating profit jumped 1,458.2%.
Also, the company posted an operating profit of KRW 10.44 trillion as favorable memory market conditions drove higher average sales price (ASP), while robust sales of OLED panels also contributed to the results.
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Samsung’s memory market continues to make a significant recovery, with the second half outlook centered on server demand, driven by demand for HBM as well as conventional DRAM and server SSDs. The company noted that the increased demand is a result of the continued AI investments by cloud service providers and growing demand for AI from businesses for their on-premise servers.
PC demand was relatively weak, while demand for mobile products remained solid on the back of increased orders from Chinese original equipment manufacturer (OEM) customers. Demand from server applications continued to be robust, with second quarter results improving significantly from the previous quarter as the Company responded to demand for high-value-added products for generative Al applications.
The Company strengthened its leadership in the DDR5 market through the mass production of a 128GB product based on 1b nanometer(nm)1 32Gb DDR5, which was developed for the first time in the industry. In the second half of 2024, Al servers are expected to take up a larger portion of the market as major cloud service providers and enterprises expand their Al investments.
As Al servers equipped with HBM also feature high content-per-box with regards to conventional DRAM and SDs, demand is expected to remain strong across the board from HBM and DDR5 to server SSDs.
During its earnings call, the firm said it plans to address the Al demand by expanding sales of HBM3 – the latest Al memory product – through capacity expansion in the second half. It will also expand sales of SSDs which are currently in high demand for AI servers as well.
Overall market demand for smartphones declined sequentially, particularly in the premium segment, as seasonal trends continued in the smartphone market. While the MX Business recorded a sequential decline in revenue, the Galaxy S24 series achieved double-digit year-on-year growth in both shipments and revenue over its predecessor for both the second quarter and the first half of the year, demonstrating the continued success of the series.
In Q2 of 2024, overall demand for smartphones is expected to increase year-on-year, with increased demand for premium products being driven by growing demand for Al and the launch of new products with innovative features.
Samsung plans to continue pushing its premium Galaxy Al products. This comes after it announced last week global availability for its newest Galaxy devices including Galaxy Z Fold6, Z Flip6, Watch Ultra and Ring.
“Even in challenging circumstances, we will continue investing in upgrading Galaxy Al functionality in order to secure a long-term sustainable growth engine,” the company noted.