Samsung profit surges 160% as chip business bounces back from brutal slump
Samsung headquarters in Mountain View, California, October 28, 2018.
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Samsung Electronics reported a rebound in earnings on Thursday; Operating profit more than doubled from the previous quarter, driven by strong demand for memory chips from AI servers.
Here are Samsung’s third-quarter results compared to the LSEG SmartEstimate, which is weighted by analysts’ estimates, which are more consistently accurate:
- Revenues: 86.1 trillion Korean won ($60.5 billion) etc. 85.93 trillion won
- Operating profit: 12.2 trillion won etc. 11.25 trillion won
While the South Korean technology giant’s quarterly revenue increased by 8.85% compared to the previous year, its first quarter operating profit increased by 32.9% in the same period.
Samsung shares gained nearly 4% in early trading in Asia.
The earnings represent a recovery from the June quarter, which was weighed down by the massive collapse in Samsung’s chip business. Operating profit increased by 160% compared to June, while revenue increased by 15.5% in the same period.
Samsung Electronics, South Korea’s largest company by market value, is a leading provider of memory chips, semiconductor foundry services and smartphones.
The company’s earnings were boosted by its chip business, where operating profit rose tenfold from the June quarter, thanks to strong demand for AI servers.
Samsung echoes memory rival’s sentiments by predicting AI chip demand will continue to grow SK HynixIt reported earnings on Wednesday.
“We expect data center companies to continually expand their hardware investments due to ongoing competition to secure AI infrastructure,” a Samsung executive said during the earnings call.
“Therefore, our demand for AI-related servers continues to grow and this demand significantly exceeds industry supply,” he added.
Chip Job
Samsung’s chip business unit reported a 19% increase in sales from the June quarter, with its memory business reaching an all-time high in quarterly sales, driven by strong demand for artificial intelligence.
Chip revenue increased by 13% compared to last year to 33.1 trillion Korean won, while operating profit increased by 81% to 7.0 trillion Korean won in the same period.
Samsung’s chip business, also known as its Device Solutions division, includes memory chips, semiconductor design and foundry units.
Samsung said the unit benefited from an affordable pricing environment, with quarterly revenues reaching record levels thanks to rising sales of high-bandwidth memory (HBM) chips, a type of memory used in artificial intelligence calculations.
The company finds itself behind its rival in memory SK Hynix is in the HBM market after being slow to land big contracts with leading AI chips Nvidia. However, this is a positive development for the company. reportedly It passed qualification tests for Nvidia’s advanced HBM chip last month.
A. report Counterpoint Research found earlier this month that Samsung reclaimed the top spot in the memory market ahead of SK Hynix in the third quarter, after falling behind its rival for the first time in the previous quarter.
MS Hwang, research director at Counterpoint Research, told CNBC that Samsung’s third-quarter performance was a clear result of a broader “memory market boom” and a rise in general-purpose memory prices.
Samsung said that entering 2026, its memory business will focus on mass production of the next generation HBM technology, HBM4.
smartphones
Samsung’s mobile experience and networking businesses, which are tasked with developing and selling smartphones, tablets, wearables and other devices, reported increases in both sales and profits.
The unit reported operating profit of 3.6 trillion won in the third quarter, up nearly 28% from the same period last year.
The company said the gains were driven by strong flagship smartphone sales, including the launch of the Galaxy Z Fold7 device.
Samsung predicted that the rapid growth of the AI industry will create new market opportunities for both its devices and chip businesses this quarter.
