Samsung Electronics has announced that it expects a significant increase in its quarterly profits, driven by the growing demand for memory chips used in artificial intelligence (AI) data centres. The tech giant estimates that its operating profit for the three months to the end of September will jump to 107.4tn won (£61bn; $80bn), marking its fourth consecutive quarter of record earnings.
The surge in demand for memory chips has been a key factor in Samsung's success, with the company being one of the world's largest memory chip makers alongside local rival SK Hynix and Micron in the US. These chips are crucial for AI firms like Nvidia, and Samsung's latest folding devices, launched in August, are also expected to contribute to the company's profits.
Samsung's forecasts are treated with credibility as they are backed by internal company data, and the company's stock market valuation has crossed $1tn (£757bn) earlier this year. The global demand for computer chips that power AI development has helped lift the earnings and shares of manufacturers linked to the technology.
The surge in demand for memory chips has resulted in a shortage of semiconductors globally, pushing up sales for firms like Samsung. This shortage has led firms, including Samsung, to raise prices, making products such as smartphones and computers more expensive for consumers.
The investment in the industry has surged, with US tech giants, including Google, Amazon, and Meta, pledging to pour more than $650bn into AI projects this year. In June, South Korea unveiled plans for at least $880bn in projects led by Samsung and SK Hynix to build out the country's chip manufacturing capabilities in the coming years.
Rival Asian firms in Japan, China, and Taiwan are also investing heavily in chip plants as demand for AI soars. This increased investment is expected to help meet the growing demand for memory chips and support the development of AI technology.
Samsung's full third-quarter earnings will be published at the end of October, and the company's success is expected to have implications for the global tech industry. The company's record earnings are a testament to the growing demand for AI technology and the importance of memory chips in powering this growth.
Key points
- Samsung Electronics expects a nine-fold surge in quarterly profits due to surging demand for memory chips used in artificial intelligence data centres.
- The company's operating profit is estimated to jump to 107.4tn won (£61bn; $80bn), marking its fourth consecutive quarter of record earnings.
- The surge in demand for memory chips has resulted in a shortage of semiconductors globally, pushing up sales for firms like Samsung.
