- Galaxy smartphone maker reports 10-fold jump in profit
- AI driving demand for memory chips
- South Korean firm targeted by activists earlier in the year
The world’s biggest memory chips and smartphone maker Samsung Electronics (005930:KS) is getting a much-needed lift from the AI (artificial intelligence) demand boom.
The South Korean technology giant clocked a 10-fold surge in its first quarter profit, aided chiefly by a recovery in chip demand thanks to the rapidly growing AI industry. Operating profit rose to 6.6 trillion won (approximately $4.8 billion) in the three months to 31 March 2024, up from the 640 billion won seen a year ago.
Q1 revenue rose to 71.9 trillion won from 63.75 trillion won a year ago, Samsung said in a press release. Stronger sales of its flagship Galaxy S24 smartphone line also factored into the increased revenue, as did a weaker South Korean won.
The bumper results come as increasing AI development has sparked a rebound in chip demand in recent quarters. Samsung’s high-bandwidth memory chips are a key component of the processors used in running AI models.
LOW BAR TO BEAT
It is worth pointing out that Q1 results were in line with expectations put out by Samsung at the beginning of April. It is also worth saying that the seemingly exponential growth in profit was in part driven by a weak base for comparison from 2023, where the chipmaker was still grappling with weak global demand.
The chipmaker said its second quarter will also ‘remain solid’ on demand from AI. The shares nudged about 1% higher in Far East trade to 77,500 won, but despite a modest rally since March, Samsung stock remains down nearly 3% year-to-date.
Samsung had been reportedly targeted by activist investors earlier this year who have demanded that the company increase dividends and kick-off a programme of share buybacks as pressure mounts on South Korean companies to address low valuations.
