Samsung Electronics has estimated that its operating profit for the third quarter jumped nearly ninefold to a record 107.4 trillion won, or $80.2 billion. This significant increase is attributed to the growing demand for artificial intelligence chips. The South Korean tech giant's profit surge is a positive sign for the industry, which has been experiencing a downturn.
The record-breaking profit is a substantial increase from 12.17 trillion won, or $8.1 billion, in the same period last year. It also surpasses the 89.49 trillion won, or $59.6 billion, reported in the previous quarter. Analysts had predicted an operating profit of 106.1 trillion won, or $70.6 billion. Samsung's revenue is estimated to be 195 trillion won, or $145.6 billion, a 127% increase from the previous year.
Samsung's impressive performance is largely driven by the growing demand for high-bandwidth memory (HBM) chips, which are used in AI processors. The company's HBM chips are in high demand due to their ability to provide high-performance data processing. Additionally, the limited supply of DRAM and NAND memory chips has led to an increase in prices, further contributing to Samsung's profit growth.
The company's stock, however, closed 2.42% lower at 262,000 won in Seoul on Thursday. Despite this, the stock has increased nearly fourfold since September last year. The Kospi index, which tracks the performance of the South Korean stock market, also declined 2.62%. Samsung's profit growth has been driven by its dominance in the memory chip market.
Taiwan's TSMC, another major chipmaker, also reported a record quarterly revenue of 1.49 trillion Taiwan dollars, or $46.8 billion. This represents a 51% increase from the same period last year and a 17.6% increase from the previous quarter. TSMC's revenue growth is driven by strong demand for its chips from major tech companies, including Nvidia and Apple.
Taiwan's exports also surged 60.9% year-on-year to a record $87.2 billion in September, driven by global demand for AI devices. The country's economic growth has been fueled by the export boom, with GDP increasing 12.9% in the second quarter. The strong export growth has raised expectations for TSMC's and Samsung's future earnings.
The earnings reports from Samsung and TSMC will provide valuable insights into the sustainability of the AI chip boom. While the demand for AI chips is expected to continue growing, there are concerns about the long-term profitability of the industry. Samsung will release its detailed earnings report on October 29, while TSMC will announce its results on October 15.
Key points
- Samsung reports a record $80 billion in quarterly operating profits, driven by AI chip demand.
- TSMC also reports a record quarterly revenue, driven by strong demand from major tech companies.
- The growth of AI chips is driving the profit surge for Samsung and TSMC.
