Samsung's Q2 2024 profits exceed forecasts with 1,450% increase

For the second quarter running, Samsung‘s earnings surpassed industry estimates. The company expects to earn a profit of around KRW 10.4 trillion (approx. $7.5 billion) in Q2 2024. That’s a staggering 1,450% or 15.5-fold YoY (year-on-year) profit increase from the same period last year. Industry analysts estimated it to make between KRW 8.5 trillion and KRW 8.8 trillion this past quarter.

Samsung rides on the AI boom as Q2 2024 profit sees magical growth

Samsung had a forgettable financial performance in 2023. Its annual profit declined 85% due to a drop in chip demand and prices. The company’s semiconductor division suffered its first losses in 14 years. But the AI boom has helped Samsung turn the tide. It’s the world’s largest maker of memory chips and is benefitting from a high demand for these chips as companies set out to establish AI data centers.

In the first quarter of 2024, Samsung’s profit increased 933% YoY. It took home KRW 6.61 trillion, up from KRW 0.64 trillion in Q1 2023. The Q2 performance was even better. In its earnings estimate, the company projected a consolidated sales revenue of KRW 74 trillion and an operating profit of KRW 10.4 trillion. The Korean conglomerate managed a profit of only KRW 0.67 trillion in Q2 2023.

Samsung hasn’t published the full Q2 2024 earnings and profit report yet. It will come later this month, detailing the financial performance of each business division and the outlook for the rest of the year. However, industry estimates suggest nearly 60% of its second-quarter profit comes from the semiconductor division. The unit has always been Samsung’s cash cow until last year’s massive price decline.

It will be interesting to see how Samsung’s smartphone division faired this past quarter. Despite selling more phones than anyone else, the unit doesn’t contribute a lot to the company’s profit. Competition is high in the Android space, leaving little room to increase the profit margin. That said, the Galaxy S24 series has been in high demand, so Samsung may have benefitted from it.

Samsung still has scope for growth in the AI chip market

The AI boom has just begun, and Samsung is already reaping the fruits. It still has scope for growth in the AI chip market. Its compatriot SK Hynix is a leader in the high bandwidth memory (HBM) segment, an area where Samsung can improve. It has sought approval for its advanced HBM solutions from Nvidia, the world’s biggest AI chip brand. Samsung’s outlook for the AI chip market for the second half of 2024 should be an interesting read. We will let you know when it shares its full Q2 2024 earnings report.