AI chip boom pushes Samsung profits to record $80bn

Samsung Electronics anticipates a substantial nine-fold increase in its quarterly profits compared to the same period last year, fueled by soaring demand for memory chips utilized in artificial intelligence (AI) data centers. The company projects its operating profit for the three months ending September will reach 107.4tn won (£61bn; $80bn), marking its fourth consecutive quarter of record earnings.

As one of the world's leading memory chip producers alongside SK Hynix and US-based Micron, Samsung plays a crucial role in supplying chips to AI firms like Nvidia. Moreover, the impending launch of Samsung's latest folding smartphones in August is expected to further bolster the company's earnings.

The full third-quarter earnings report of Samsung is scheduled for release at the end of October. In recent years, there has been a significant surge in global demand for computer chips that power AI development, driving up earnings and share prices for manufacturers involved in the technology. This increasing demand has resulted in a global shortage of semiconductors, consequently driving up sales for companies like Samsung. In fact, Samsung's stock market valuation surpassed the $1tn (£757bn) mark earlier this year.

Investments in the industry have also surged, with major US tech giants such as Google, Amazon, and Meta committing to pour more than $650bn into AI projects this year. In June, South Korea unveiled ambitious plans for at least $880bn in projects led by Samsung and SK Hynix to expand the country's chip manufacturing capabilities in the coming years. Meanwhile, rival Asian firms in Japan, China, and Taiwan are also heavily investing in chip plants as demand for AI continues to soar.

The ongoing chip shortage, driven by surging demand, has led to price increases for companies like Samsung, resulting in more expensive products such as smartphones and computers.