Samsung Electronics achieved a record quarterly operating profit in the second quarter of this year, surpassing all global tech giants. The surge in demand and prices for memory semiconductors, including DRAM, NAND flash, and high-bandwidth memory (HBM), driven by the expansion of artificial intelligence (AI) infrastructure, contributed to an operating profit of 150 trillion won in the first half of the year. Expectations for continued strength in memory prices and expanded HBM4 supply suggest the company could reach an annual operating profit of 400 trillion won.
According to Samsung Electronics, the preliminary consolidated operating profit for the second quarter was 89.4 trillion won, marking an increase of 1,810.3% compared to the same period last year. The operating profit for the first quarter was 57.2 trillion won, bringing the total operating profit for the first half to 146.6 trillion won, a growth of 1,186% from 11.4 trillion won in the first half of last year. This marks the first time the company has exceeded 100 trillion won in operating profit for a half-year period.
This performance is the highest quarterly result among global tech companies. Nvidia and Apple reported their largest quarterly operating profits at approximately $53.5 billion (about 82 trillion won) and $50.9 billion (about 78 trillion won), respectively. Despite accounting for large one-time costs, including performance bonuses, Samsung surpassed these previous records.
Considering the performance bonuses, the actual profit generation capacity is even greater. In May, Samsung's labor and management agreed to a wage negotiation that included a special management performance bonus funded by 10.5% of the operating profit from the Device Solutions (DS) division, which handles semiconductor operations. It is estimated that around 17 trillion won in performance bonuses, including approximately 6 trillion won from the first quarter and about 11 trillion won from the second quarter, were reflected in the second quarter results. Before accounting for these bonuses, the second quarter operating profit is estimated to be around 106.5 trillion won.
The record performance is attributed to the increased profitability across all memory product lines, including DRAM, NAND, and HBM. As global investments in AI infrastructure continue, demand for HBM, server DRAM, and enterprise solid-state drives (eSSD) has surged, while supply has struggled to keep pace, leading to a rapid increase in memory prices.
Prices for DRAM and NAND are estimated to have risen by 80-85% in the first quarter compared to the previous quarter, with a further increase of around 50% in the second quarter. Market research firm Counterpoint Research forecasts that the global memory market size will reach approximately 350 trillion won in the second quarter, an increase of over 60% from the previous quarter. The upward trend in memory semiconductor prices is expected to continue in the second half of the year. Market research firm TrendForce predicts that DRAM prices, which have already reached record highs, will rise an additional 13-18% in the third quarter.
The expansion of profitability due to rising semiconductor prices is expected to continue for the foreseeable future. As memory prices soar, customers are increasing long-term supply agreements (LTA) to secure stable volumes. In the second quarter, LTAs accounted for about 30% of Samsung's memory supply contracts, and this proportion is expected to grow in the third quarter.
The contribution of HBM, a high-margin product, is expected to increase further in the second half of the year. Samsung began mass production of the world's first sixth-generation HBM, HBM4, in February, and within about four months, related sales surpassed $1 billion (1.5 trillion won). Recent reports indicate that cumulative sales have exceeded approximately $1.2 billion (1.85 trillion won). HBM4 is set to be integrated into Nvidia's next-generation AI accelerator, 'Lovelace,' which is expected to significantly boost sales and profit contributions starting in the second half.
There are projections that Samsung's annual operating profit will exceed 300 trillion won and could reach 400 trillion won. Analysts estimate the average annual operating profit for this year to be around 374 trillion won. Some global investment banks, including Citi, predict annual operating profit could reach 400 trillion won. With 146.6 trillion won already earned in the first half and continued price increases for DRAM and NAND, along with expanded HBM4 supply, the company is likely to achieve profits exceeding those of the first half in the latter half of the year.
* This article has been translated by AI.
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