A Samsung executive’s upbeat outlook has heightened expectations for record quarterly profits at Samsung and SK hynix as AI-driven chip demand stays strong.
Samsung Electronics' Seocho headquarters in southern SeoulNEWS1
A Samsung Electronics executive expressed confidence in the company's performance, fueling expectations that it could post the highest quarterly operating profit ever recorded by a global technology company.
Kim Yong-kwan, president and head of corporate management, strategy and operations for Samsung Electronics' Device Solutions (DS) Division, made remarks that this year's operating profit is expected to meet market consensus during the division's town hall meeting last Friday, according to semiconductor industry sources on Monday.
Brokerages estimate Samsung Electronics' annual operating profit to be around 300 trillion won ($195.97 billion) this year.
“This year's profit will exceed the cumulative profit generated over the past 40 years since we entered the semiconductor business,” Kim said during the meeting.
Kim also emphasized the company's strong free cash flow.
“We have invested more than 40 trillion won every year and will continue to increase our investment,” Kim said. The comments suggest the company intends to maintain aggressive investment to meet growing demand for AI chips.
Market expectations also suggest Samsung Electronics could set a new quarterly operating profit record. It is set to release preliminary second-quarter earnings on Tuesday.
Samsung Electronics is expected to post second-quarter operating profit of 84.6 trillion won, based on market consensus compiled by AI-powered investment platform epic AI. If the company meets expectations, it would surpass Nvidia's first-quarter operating profit of $53.54 billion, setting a record for the highest quarterly operating profit by a technology company.
An interior view of Line 15 at Samsung Electronics’ semiconductor plant in HwaseongSAMSUNG ELECTRONICS
Korea's two leading chipmakers — Samsung Electronics and SK hynix — are also expected to post combined quarterly operating profit close to 150 trillion won for the first time.
SK hynix is scheduled to report earnings on July 29 and is expected to post a second-quarter operating profit of 64.44 trillion won. If both companies meet market expectations, their combined operating profit would total about 149 trillion won.
But some experts say the companies will need to deliver earnings that significantly exceed expectations amid concerns that memory chip stocks may have reached their peak.
The size and duration of long-term memory chip supply contracts, along with the outlook for memory prices after the third quarter, are expected to be key issues during the earnings season. JP Morgan stated in a recent report that the second-quarter earnings season would mark an inflection point in the market's reassessment of the memory cycle.
Investors are also watching SK hynix's planned American depositary receipt, or ADR, listing on Friday.
HSBC raised its target price for SK hynix from 2.9 million won to 4 million won in a June 26 report, saying it was applying a 20 percent valuation premium to reflect “more proactive shareholder-friendly initiatives and improved accessibility to global investors” following the ADR listing.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
