[Photo Credit: Reuters]
Samsung Electronics (005930.KS), opens new tab on Tuesday flagged a 19-fold jump in second-quarter operating profit, surpassing its combined earnings over the past three years, but investors wiped more than $80 billion off its market value on concerns over how long the AI bonanza will last.
While Samsung has benefited massively from the AI data centre boom that has propelled memory chip prices to record highs, the outlook for chipmakers has been clouded by worries U.S. tech giants may slow their infrastructure plans and curb chip demand.
Samsung estimated April-June operating profit at 89.4 trillion won ($58.44 billion), beating an LSEG SmartEstimate of 87.3 trillion won, according to a regulatory filing. It reported a profit of 4.7 trillion won a year earlier. Revenue would likely rise 129% to 171 trillion won from a year earlier, it said.
The South Korean tech giant’s shares still dropped as much as 10.1% and finished down 6.9%, while rival SK Hynix (000660.KS), opens new tab ended down 6%, dragging the benchmark KOSPI (.KS11), opens new tab down 4.9%.
Analysts attributed the declines to some lofty market expectations and worries that spending on AI data centres may slow down.
Memory chip prices continued to climb during the quarter as AI spending broadened beyond high-bandwidth memory (HBM) into conventional DRAM and NAND products. Citi Research last week said average selling prices for DRAM and NAND rose 44% and 53% quarter-on-quarter, respectively, in the second quarter.
However, Morningstar analyst Jing Jie Yu said Samsung’s revenue estimate was not as strong as expected.
Samsung’s profit surged even as it set aside funds for sizeable bonuses to its semiconductor workers, as agreed in a wage deal in May linking their pay to operating profit.
Without those provisions, its operating profit would likely have exceeded 100 trillion won, analysts said.
Analysts said rapid growth in HBM production has tightened supply of conventional memory products used in smartphones, PCs and enterprise servers, further supporting prices.
