Samsung Electronics increased net profit sixfold, exceeding market expectations

At the end of the first month of the third quarter, many companies rushed to sum up the results of the previous quarter, Samsung Electronics was among them. While preliminary data on the company’s revenue and operating profit were known in the first half of the month, it published detailed reports only today. As it turned out, Samsung’s net profit soared sixfold to $6.96 billion.

Image Source: Samsung Electronics

Analysts, meanwhile, as Bloomberg explains, expected only $5.8 billion in net profit. Previously, the company announced an increase in operating profit by 15 times in the second quarter to $7.6 billion, as well as an increase in revenue by 23% to $53.5 billion. Such dynamics are observed for the first time since 2021. Quite predictably, Samsung’s semiconductor business turned out to be the engine of growth. In this area, operating profit reached $4.7 billion, as rising memory prices were generally accompanied by growing demand for HBM-type chips. Revenue from sales of the latter increased by more than 50% compared to the first quarter. Currently, HBM3E chips account for no more than 10% of Samsung’s core revenue. The company intends to supply this type of memory in the interests of several clients at once, but it categorically refuses to name their names.

Samsung representatives did not comment on recent rumors about obtaining approval for the supply of HBM3 for Nvidia’s needs, citing strict contractual relationships with customers, but emphasized that by the end of the year they are going to increase the share of revenue from the supply of HBM3E to 60% of all funds received in the HBM segment . Next year, the company is going to double the production volume of HBM family chips, and in the second half of this it will increase it by 3.5 times compared to the first half of the year.

According to the results of the last quarter, Samsung’s research and development expenses increased by 11% to a record $5.8 billion. The employee strike, which began several weeks ago, did not affect the rhythm of Samsung product release, as management emphasizes.

The South Korean giant was forced to admit that this year the supply of memory chips for the PC and smartphone segment will be limited, since priority will be given to the server segment in general and HBM in particular. Revenue in the smartphone segment, as Samsung expects, will grow, but mainly due to demand for expensive models with AI functions, while demand in the entry-level price segment will slow down. The Galaxy S24 series continues to enjoy stable demand, as noted by Samsung representatives. The negative revenue dynamics in the second quarter in the smartphone segment as a whole is due to seasonal factors, according to them.

In the second half of the year, demand for server components is expected to remain at a high level, not only due to DDR and HBM, but also 3D NAND solid-state memory for drives. The company is ready to expand HBM3E production in the second half of the year, and solid-state drives are in high demand in the server segment.