By Joyce Lee and Heekyong Yang
SEOUL (Reuters) -Samsung Electronics estimated on Friday a greater than 15-fold rise in its second-quarter working revenue, as rebounding semiconductor costs pushed by the substitute intelligence growth lifted earnings from a low base a 12 months in the past.
The world’s largest reminiscence chip, smartphone and TV maker estimated its working revenue rose to 10.4 trillion gained ($7.54 billion) within the quarter ended June 30, from 670 billion gained a 12 months earlier.
The revenue beat a 8.8 trillion gained LSEG SmartEstimate, which is weighted towards forecasts from analysts who’re extra constantly correct, and the quarter was its most worthwhile for the reason that third quarter of 2022.
Along with increased chip costs, the better-than-expected revenue possible mirrored Samsung (KS:) reversing its earlier stock writedowns on its books, as the worth of its chip stock has rebounded in accounting phrases, analysts stated.
Income possible rose 23% within the second quarter from the identical interval a 12 months earlier to 74 trillion gained, Samsung stated.
Samsung shares opened up 1.2% after the steering, versus a 0.4% rise within the wider market.
The corporate is because of launch detailed second-quarter earnings on July 31.
AI DEMAND
Samsung’s key semiconductor division possible posted its second consecutive quarterly revenue, bettering on the primary quarter, as reminiscence chip costs maintain rising from a mid-2022 to end-2023 trough that was brought on by weak post-pandemic demand for devices that use the chips.
Explosive demand for high-end DRAM chips resembling excessive bandwidth reminiscence (HBM) chips utilized in AI chipsets, in addition to chips utilized in information centre servers and devices that run AI providers have helped buoy chip costs, analysts stated.
Through the second quarter, reminiscence chip costs jumped by about 13% to 18% versus the earlier quarter for DRAM chips utilized in tech units and 15% to twenty% for NAND Flash chips used for information storage, in response to information supplier TrendForce.
However the climb in reminiscence chip costs could gradual in third quarter, with TrendForce forecasting a 5% to 10% value hike for each typical DRAM and NAND Flash chips, as demand for older, legacy chips from the buyer electronics market stays lacklustre.
“On the earnings name on the finish of the month, we will probably be concerned with Samsung’s outlook on legacy chips, which will probably be an indication for whether or not this chip trade restoration can final into subsequent 12 months,” stated Ko Yeongmin, an analyst at Daol Funding & Securities.
AI-driven demand for high-end chips resembling HBM and solid-state drives (SSDs) will outperform the remainder of the market, analysts stated, although Samsung has been lagging behind South Korean rival SK Hynix within the provide of high-end HBM chips to prospects like Nvidia (NASDAQ:).
U.S. reminiscence chip rival Micron Expertise (NASDAQ:) beat estimates for its newest quarterly income final week pushed by a requirement surge from the AI trade, though its current-quarter forecast upset traders who had been much more upbeat.
Buyers are awaiting information of whether or not Samsung’s newest fourth-generation HBM chips will obtain approval to produce Nvidia after they failed earlier exams due warmth and energy consumption issues, in response to sources.
Samsung in Might changed the chief of its semiconductor division in a bid to beat what it referred to as a “chip disaster”.
Shares in Samsung have been up 8% year-to-date as of Thursday, in comparison with SK Hynix shares’ 63% rise.
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