Samsung AI Chip Boom Set to Drive Record Second-Quarter Profit

Samsung is expected to report a record operating profit for the second quarter as strong demand for artificial intelligence (AI) continues to drive memory chip prices higher.

Analysts surveyed by LSEG forecast that Samsung Electronics will post an operating profit of 86 trillion won ($56.35 billion) for the April–June quarter. That would represent an almost 18-fold increase from 4.7 trillion won a year earlier and mark the company’s third consecutive quarter of record earnings.

The earnings surge reflects a prolonged shortage of memory chips. AI infrastructure spending continues to outpace supply, keeping the memory market tight.

Moreover, analysts expect the supply shortage to continue into next year.

AI demand lifts memory prices

Growing demand for AI applications has boosted both advanced and conventional memory products.

In addition to high-bandwidth memory (HBM), demand for traditional DRAM and NAND chips has increased as AI workloads expand across cloud computing and data centres.

According to Citi Research, average selling prices rose 44% for DRAM and 53% for NAND during the second quarter.

Samsung supplies memory chips to leading technology companies, including Nvidia, Google and Apple.

Meanwhile, the ongoing rally has lifted the share prices of Samsung, SK Hynix and Micron, pushing all three companies above a $1 trillion market valuation.

Bonus costs may affect earnings

Despite the strong outlook, analysts warn that employee bonus provisions could reduce reported earnings.

Samsung recently reached a wage agreement that allocates 10.5% of the semiconductor division’s operating profit to special bonuses for chip employees.

As a result, the timing of those accounting provisions could influence second-quarter results.

AI investment remains the key risk

Looking ahead, analysts believe slower AI infrastructure spending poses the biggest threat to the memory market.

JPMorgan said investors remain optimistic about current supply-demand conditions. However, they also question whether cloud providers can sustain rapidly rising AI-related capital spending over the long term.

Nevertheless, Samsung has signed multi-year supply agreements with customers to secure future demand.

In addition, Nomura expects DRAM prices to rise 24% and NAND prices 25% in the July–September quarter, supported by continued demand from consumer electronics and AI data centres.

However, rising memory costs are also squeezing Samsung’s smartphone business. Analysts believe the company may need to increase handset prices further in the second half of the year to protect profit margins.