A view of the Samsung booth during the annual Applicance and Electronics World Expo in Shanghai in March 2024.
YUYU CHEN / Feature China/Future Publishing via Getty ImagesKorean billionaire Jay Y. Lee’s Samsung Electronics forecasted on Friday that its operating profit in the first quarter would skyrocket more than 10-fold from a year earlier.
In its preliminary earnings statement, Samsung, the world’s largest memory chip maker by sales, reported an operating profit of 6.6 trillion won ($4.9 billion) in the first three months of 2024. That’s up from 640 billion won in the same period last year. The increase would give Samsung its highest operating profit since the third quarter of 2022.
The Korean tech giant also estimated that its first-quarter revenue would increase 11% year-on-year to 71 trillion won. Shares of Samsung Electronics closed down 0.9% on Friday, in line with the benchmark Kospi index, after rising about 36% over the past year.
Analysts have attributed Samsung’s upbeat estimates to rising memory chip prices, which are bouncing back from a downturn last year when consumers cut back on purchases of electronics amid high inflation. The recovery has been driven by a boom in artificial intelligence, which requires a large number of memory chips to store data for AI model training and processing.
Samsung has been trying to catch up with rivals in the production of high bandwidth memory (HBM) chips, which are best suited to work with Nvidia’s graphics processors for AI computing. The HBM market is currently dominated by Korean billionaire Chey Tae-won’s SK Hynix, but Nvidia’s cofounder and CEO Jensen Huang last month said his company was looking to buy Samsung’s HBM chips.
Another boost for Samsung’s earnings was the robust sales of its first AI-powered smartphones, according to analysts. The company in January started selling its flagship Galaxy S24 phones, which feature functions based on Google’s generative AI technology, including live translation of calls and a search tool that allows users to circle an image on the phone to get related information.
Samsung is set to release detailed earnings on April 30.
