By Hyunjoo Jin
SEOUL, April 3 (Reuters) – Samsung Electronics, benefiting from red-hot chip prices stoked by the AI boom, is expected to book a six-fold jump in operating profit for January-March – a quarterly record and just shy of what it earned for all of the past business year.
Bolstered by what it calls an “unprecedented supercycle” for memory chips, Samsung is projected to flag on Tuesday a profit of 40.5 trillion won ($26.9 billion) on a 50% climb in revenue, according to an LSEG SmartEstimate drawn from 29 analysts.
By comparison, last year, the world’s biggest maker of memory chips logged 43.6 trillion won in operating income.
Some analysts are even more bullish, with Citi, for example, forecasting 51 trillion won.
“You couldn’t ask for things to be better,” said Ko Yeongmin, analyst at Daol Investment & Securities, referring to the strength in the memory chip market.
HEADWINDS FROM THE WAR
Despite the expected huge jump in earnings, investors are likely to focus on any clues as to what extent the war in the Middle East might impact Samsung’s growth momentum.
Samsung, however, does not usually say much about its outlook until it gives a more detailed earnings breakdown which is due later in the month.
The war has raised energy costs and threatens to disrupt supply of key production materials, which in turn may force Big Tech firms to roll back their investments in artificial intelligence data centres.
There have also been some signs of an easing in spot prices for DRAM (dynamic random access memory) chips as device manufacturers have hiked prices of smartphones, computers and other products, denting consumer demand.
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These concerns, as well as the unveiling of memory-saving technology from Google called TurboQuant last month, have contributed to a selloff in memory chip stocks, with Samsung’s shares losing 14% since the war began on February 28.
That said, the shares are still up 50% this year, buoyed by Big Tech AI investment plans worth hundreds of billions of dollars.
BUT THERE’S STILL A CHIP SHORTAGE
Some experts remain upbeat about the outlook, noting that there is a severe shortage of memory chips.
“We have seen a cooling (in memory chip spot prices) over the last 3-4 weeks yes. We do believe it’s temporary,” said Tobey Gonnerman, president of semiconductor distributor Fusion Worldwide.
“The demand and backlog remains strong,” he said, adding that it would be a long time before memory manufacturing could meet total demand.
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