South Korean technology giant Samsung Electronics says it expects its profits to jump 19 times on the back of global demand for artificial intelligence (AI) memory chips.
The company estimates it earned 89.4tn won (£43.6bn; $58.4bn) between the beginning of April and the end of June, its third consecutive record quarterly operating profit.
Major South Korean companies like Samsung release their earnings forecasts ahead of official detailed reports to guide investors.
Samsung’s latest forecast, released on Tuesday ahead of its full results due in late July, comes as semiconductor demand continues to exceed supply – sending prices soaring.
Samsung said in a preview, known as earnings guidance, that it made sales of about 171tn during the quarter, more than double the same period last year.
Mark Einstein, industry analyst at Counterpoint Research, said the company’s estimated earnings were “one of the best quarterly performances ever,” coming close to the tech sector record set by Nvidia earlier this year.
“It has everything to do with the AI boom as memory companies ride the tidal wave of limited supply and unprecedented demand,” he said.
Samsung has increased the prices of its memory chips due to low supply.
Research firm IDC said demand for semiconductors for data centers and other AI infrastructure has been “unlike anything the memory industry has seen,” impacting the supply of chips for everyday electronics.
“We expect supply to remain limited next year given continued demand for AI data centers,” said Brian Ma, IDC technology devices researcher.
SAMSUNG One of the world’s largest semiconductor manufacturers, making its own line of electronic components as well as chips for companies like Nvidia and Google. Shares of major tech companies have surged in recent months due to rising demand for chips.
Samsung shares fell nearly 7% in Seoul on Tuesday as some investors expected its profits to be even higher.
Its stock market value has more than doubled since the beginning of the year, while South Korean rival SK Hynix has surged more than 200%.
Strong performance from both companies has helped boost the value of South Korea’s benchmark stock index, the Kospi, by more than 80% this year.
In May, Nvidia reported record quarterly sales and profits, with revenues exceeding $80 billion between January and March.
But Nvidia’s stock fell at the time, in what some analysts said was a sign that investors were worried about increasing competition in the sector.
In June, South Korea unveiled plans to invest at least $880 billion in projects led by Samsung and SK Hynix to boost the country’s chip manufacturing in the coming years.
Rival Asian companies in Japan, China and Taiwan are also investing heavily in chip factories to meet growing demand.