Business is going well for the South Korean electronics company Samsung. Rising prices in the chip industry and the AI boom are driving significant growth.
Rising chip prices and the boom in artificial intelligence (AI) have given the electronics giant Samsung a significant jump in profits in the first quarter of 2024. The surplus increased year-on-year by more than four times to 6.75 trillion won (4.6 billion euros), as the South Korean company announced.
Operating profit, which is generated from core businesses alone, increased more than tenfold to 6.61 trillion won. In the first quarter of last year it was 640 billion won. Sales rose by 13 percent to 71.9 trillion won (48.8 billion euros).
Strong demand and rising prices in the chip business
The chip division alone returned to profitability after an operating loss last year. Samsung is the market leader in memory chips and televisions. According to calculations by market researchers, the South Koreans also regained the top spot in the smartphone market from Apple in the first quarter.
Oversupply and sluggish demand had long plagued the chip industry. However, Samsung had already noted signs of recovery at the end of last year. The chip business benefited from strong demand and rising prices in the first quarter. According to the company, the division reported an operating profit of 1.91 trillion won (1.3 billion euros) – after a loss of a good 15 trillion won in the full year of 2023.
The group expects stable business conditions
Samsung was also confident about the chip business in the second quarter. Demand is expected to grow “for products used in AI and those for conventional servers and data storage.” Looking at the full year, business conditions are expected to remain stable despite existing uncertainties including geopolitical issues.
Samsung also expects growth in the market for smartphones, tablet computers and small computer systems that are worn directly on the body – so-called wearables. The reasons for this assessment included, among other things, stabilizing consumer sentiment, the spread of AI products and services and economic growth in emerging markets.
According to the information, the global smartphone market slowed in the first quarter. However, the high usage rates of the S24 model, which is equipped with AI functions for the first time in its own Galaxy series, contributed to the increase in sales, it said.
Source: Stern
