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Samsung Digital City in Suwon. / Courtesy of Samsung Electronics

Samsung Electronics posted an operating profit of 89.4 trillion won for the second quarter, ranking first in performance among global Big Tech companies in history. This milestone is driven by a surge in demand for memory semiconductors, particularly High Bandwidth Memory (HBM), fueled by the emergence of artificial intelligence (AI)—a record unprecedented even among global Big Tech firms.

On the 7th, Samsung Electronics disclosed its preliminary earnings for the second quarter, recording a consolidated revenue of 171 trillion won and an operating profit of 89.4 trillion won. The operating profit marks an 1,810.3% increase compared to the same period last year, while revenue rose by 129.31%.

This performance sets a new record for the third consecutive quarter since the fourth quarter of last year. Notably, the second-quarter earnings surpassed previous records set by global Big Tech giants, with Nvidia's highest quarterly operating profit standing at 53.5 billion dollars (approx. 82 trillion won) and Apple's at 50.9 billion dollars (approx. 78 trillion won).

As this performance excludes an estimated 20 trillion won set aside for employee performance incentive provisions, expectations are rising that the actual operating profit substantially exceeded 100 trillion won.

However, with most of the earnings estimated to have generated from the Device Solutions (DS) division in charge of semiconductors, the disparity between business units remains stark.

While a rise in memory semiconductor prices improves the operating profit margin for the DS division, it strains profitability for the Device eXperience (DX) division, covering mobile and home appliances, due to heightened cost burdens. Consumer sentiment has not eased enough to offset this pressure, intensifying dilemmas for the DX division. Samsung Electronics recently adjusted its businesses to focus strictly on highly profitable segments, such as halting sales of TVs and home appliances in China. The foldable phones set to be unveiled this month are also widely expected to see a price increase.

While Samsung Electronics' performance is projected to be driven by semiconductors for the time being, the industry anticipates the upward trend to persist rather than face peak-out concerns. This is because Samsung Electronics' long-term contracts are expanding, and the supply shortage is unlikely to ease until at least next year.

The investment securities industry estimates Samsung Electronics' annual operating profit for this year at approximately 373 trillion won. Concurrently, infrastructure investments, including the semiconductor cluster in the southwestern region, are set to proceed.

Samsung Electronics plans to hold a conference call on the 30th to provide a detailed briefing on the performance of each business unit.

                                                                                                             Ahn So-yeon