Samsung’s Q2 earnings rise as chipmakers profit from global AI surge
Thursday saw record operating profits for South Korean tech behemoth Samsung Electronics at 89.5 trillion won ($62 billion) for the period of April to June. SK Hynix, located just across town, also announced record earnings the previous day. Both companies are capitalising on the worldwide surge in artificial intelligence. Despite their soaring profits, the companies’ shares have experienced a significant decline this week in South Korea’s unpredictable stock market, characterised by the influence of retail investors who frequently cause abrupt fluctuations in share prices. This downturn is fuelled by rising concerns regarding their substantial investments in expanding manufacturing capacity and the looming threat of heightened competition from China.
Samsung’s operating profit for the second quarter experienced a remarkable increase of over 19 times compared to the previous year, with the majority of this growth attributed to its semiconductor division. This surge was primarily fuelled by escalating chip prices, a consequence of heightened demand for AI servers, alongside a rise in shipments of advanced high-bandwidth memory chips essential for powering AI applications. That was more significant than the operating loss in its mobile, TV, and home appliances division, which was partially attributed to increased component costs. Samsung’s quarterly revenue of 171.5 trillion won was also an all-time high. The company stated that it anticipates robust demand for its memory products in the latter half of the year, propelled by the ongoing expansion of AI infrastructure and the wider adoption of agentic AI.
Demand for server chips is anticipated to increase, resulting in a continued undersupply in the market, according to a statement. Samsung’s report was released a day following SK Hynix’s announcement of a record second-quarter revenue amounting to 60.5 trillion won. However, SK Hynx’s profit fell short of the elevated market expectations, resulting in a decline of over 9 percent in the company’s shares on Monday. Samsung’s share prices have experienced a decline this week. As Samsung and SK Hynix initiate significant investments in semiconductor manufacturing facilities and data centers in alignment with South Korea’s expanding AI ambitions, analysts are increasingly voicing concerns regarding the potential for these substantial expenditures to yield adequate returns.
Shares of South Korean chipmakers have faced pressure due to rising concerns regarding intensifying competition from China. Reports indicate that a state-owned Chinese company has commenced mass production of domestically developed immersion deep-ultraviolet lithography machines, which are critical for advanced chipmaking. Investor concerns were further amplified by the robust stock market debut of Chinese memory chipmaker ChangXin Memory Technologies, according to some analysts.
