AI chip boom lifts Samsung profits by 1,800%

South Korean technology giant Samsung Electronics said it expects to post a 19-fold increase in profits, driven by global demand for artificial intelligence (AI) memory chips.

The company estimates it achieved a third consecutive record quarter of operating profit, generating 89 trillion won (£44bn; $58bn) between the beginning of April and the end of June.

Major South Korean firms like Samsung release earnings forecasts before official detailed reports to help guide investors.

Samsung’s latest forecast, released on Tuesday ahead of full results at the end of July, comes as demand for semiconductors continues to outpace supply, driving up prices.

In its preview, known as its earnings guidance, Samsung said it had sales of about 171 trillion won in the quarter, more than double the figure from the same period last year.

Industry analyst Marc Einstein of Counterpoint Research said the company’s forecast earnings marked one of the “best quarterly performances ever” and were close to the tech industry record Nvidia set earlier this year.

“This has everything to do with the AI ​​boom, as memory companies continue to ride a tidal wave due to limited supply and unprecedented demand,” he added.

It is one of the world’s largest semiconductor manufacturers, producing chips for companies such as Samsung, Nvidia and Google. Shares of major technology companies have soared in recent months as demand for chips has increased.

Samsung’s shares have more than doubled in value since the beginning of this year, while its South Korean rival SK Hynix has increased by more than 200%.

The strong performance of both firms has helped the value of South Korea’s benchmark stock index, the Kospi, soar more than 80% this year.