In the first quarter of 2024, Samsung Electronics, led by Korean billionaire Jay Y. Lee, is expecting a significant increase in operating profit to over 10 times the previous year’s figures. The company’s preliminary earnings statement reported an operating profit of 6.6 trillion won, a substantial jump from 640 billion won in the first quarter of 2023. This surge in profit is anticipated to be the highest since the third quarter of 2022, highlighting the company’s strong performance in the memory chip market.
Additionally, Samsung forecasts a year-on-year revenue increase of 11% to 71 trillion won for the first quarter of 2024. Despite this positive outlook, shares of Samsung Electronics closed down 0.9% on Friday, aligning with the benchmark Kospi index. However, the stock has seen a significant 36% rise over the past year, indicating the market’s confidence in the company’s growth potential.
The optimistic estimates for Samsung’s performance in the first quarter are largely attributed to the resurgence of memory chip prices. Following a downturn last year due to reduced consumer spending on electronics amidst high inflation, memory chip prices have rebounded. The demand for memory chips has been driven by the growing application of artificial intelligence, which requires substantial memory chip capacity for data storage and processing in AI model training.
Samsung has been striving to compete with industry rivals in the production of high bandwidth memory (HBM) chips, which are crucial for AI computing in collaboration with Nvidia’s graphics processors. Currently, the HBM market is dominated by SK Hynix, owned by another Korean billionaire, Chey Tae-won. Nvidia’s interest in purchasing Samsung’s HBM chips further underscores the importance of these components in the AI computing landscape.
Apart from strong memory chip sales, Samsung’s earnings have also been supported by the successful launch of its first AI-powered smartphones. The company introduced its flagship Galaxy S24 phones in January, featuring innovative functions powered by Google’s generative AI technology. These include live translation of calls and a search tool that enables users to obtain related information by circling an image on the phone. The positive reception of these devices has contributed to Samsung’s robust financial performance in the first quarter of 2024.
Samsung is scheduled to release detailed earnings on April 30, providing further insight into the company’s financial results and strategic developments. As Samsung continues to leverage its strengths in memory chip production and innovative AI capabilities, the company is well-positioned to capitalize on the growing demand for advanced technologies in various sectors, contributing to its sustained growth and profitability in the coming quarters.