Samsung predicts an impressive rise in profits for the second quarter of 2024, driven by a boom in AI technology.
The technology giant, which is the world's largest producer of memory chips, smartphones, and TVs, expects profits to increase 15 times compared to the same period last year.
Increasing Demand for AI Chips
Strong demand for high-end chips, especially those designed for AI applications, has driven up prices considerably. This has had a positive impact on Samsung's earnings forecast for the second quarter.
According to Marc Einstein, chief analyst at Tokyo-based ITR Corporation, the increasing demand for AI chips in data centers and smartphones is driving this growth.
Samsung expects profits to reach 10.4 trillion won (about $7.54 billion), up significantly from 670 billion won in the same period last year. This figure also beats analysts' expectations of 8.8 trillion won, according to LSEG SmartEstimate.
This announcement has already had a positive effect on Samsung shares, which rose more than 2% in early trading in Seoul, according to the BBC.
The Impact of AI on the Market
The optimism surrounding AI technology has not only benefited Samsung.
The market value of chipmaker Nvidia surpassed $3 trillion last month, briefly making it the world's most valuable company.
The AI boom that has given Nvidia a massive boost has also bolstered Samsung's earnings and the entire sector in general.
Possible Challenges Ahead
Despite the positive outlook, Samsung faces potential challenges.
A possible three-day strike looms next week, with a union demanding a more transparent system for bonuses and time off. The strike, expected to start on Monday, could affect production and thus the company's short-term outlook.
