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The South Korean giant expects AI servers to take up a larger portion of the market in H2 as cloud service providers and enterprises expand AI investments.
Samsung has posted strong earnings for its second financial quarter, with operating profit up nearly 1,500pc from last year thanks to soaring demand for AI chips globally.
The electronics giant posted more than 74trn Korean won in revenue and an operating profit of 10.44trn Korean won. Samsung attributed this to “favourable market conditions” that drove higher sales prices as well as “robust” OLED panel sales.
The latest earnings announced today (31 July) is in line with guidance posted earlier this month, when Samsung said it expected to make operating profit of between 10.3trn and 10.5trn Korean won in its second quarter of 2024 – more than 15 times the 670m Korean won in profits it made in the same period last year.
It also expected revenue to be in the region of 73trn to 75trn Korean won, higher than the 60trn it raked in in the second quarter of last year.
Samsung said that the memory market has seen continued recovery, a demand that it says has increased because of AI investments by cloud service providers and growing demand for AI from businesses for their on-premises servers.
PC demand, on the other hand, was relatively weak, Samsung said, while demand for mobile products remained solid on the back of increased orders from Chinese original equipment manufacturer customers.
Demand from server applications was “robust”, with second quarter earnings improving significantly from the previous quarter as Samsung responded to demand for products for generative AI applications.
Now, the company expects AI servers to take up a larger portion of the market in the second half of 2024 as major cloud service providers and enterprises expand their AI investments. Samsung also said its foundry business expects a rebound in mobile demand and overall growth.
“In the second half of the year, the release of new smartphones from major customers and potential replacement demand with the adoption of AI is expected to lead to an increase in mobile display sales,” Samsung wrote. “However, competition among panel makers is likely to be more intense than in the first half.”
Comeback and strikes
Headquartered near Seoul in South Korea, Samsung is the world’s largest maker of memory chips, smartphones and TVs. Its latest earnings mark a strong comeback after it was forced to cut its global chip production ahead of a profit plunge last year. It also faced challenges in the smartphone market amid stiff competition.
However, the company has been turning things around. A focus on generative AI, a key feature of its latest flagship smartphone model Galaxy S24, has helped the company regain a lead in the smartphone market and the demand for AI helped its profits rise back up this year.
Samsung unveiled a new range of foldable smartphones and smartwatches, infused with advancements in generative AI, at its Unpacked event earlier this month. The company also announced a bigger pivot into the health monitoring market, with the launch of Galaxy Ring, a wearable device that gives users detailed reports on their health.
But as profit continue to increase, Samsung has also faced strikes from thousands of workers “in the face of the company’s neglect of labourers”.
Earlier this month, the National Samsung Electronics Union, which has approximately 30,000 members, went on strike to demand better pay, an extra day of annual leave and changes to the employee bonus system. According to Reuters, the most recent talks between the company and workers ended without results.
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