November 25, 2024

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Samsung Electronics' office building in Seoul (Newsis)

Samsung Electronics predicted Friday that its operating profit in the April-June period would rebound to exceed 10 trillion won ($7.3 billion), driven by a recovery in demand for memory chips and rising prices on the back of the expansion of the artificial intelligence market.

Samsung's second-quarter operating profit is estimated to hit 10.4 trillion won, up 1,452.2 percent from a year ago, according to the company’s earnings guidance. The figure far exceeded the 8.23 trillion won consensus by local analysts provided by market intelligence firm FnGuide.

It would be the first time the tech giant has posted an operating profit of above 10 trillion won since the third quarter of 2022, when it logged 10.8 trillion won.

It would also be above its figure for the whole of last year -- 6.5 trillion won.

Sales in the second quarter are estimated to grow 23.3 percent on-year to 74 trillion won. The sales estimate was also higher than the consensus of 73.7 trillion won projected by FnGuide.

Yet the company did not disclose net earnings in the guidance.

While Samsung did not release detailed information on the performance of its key business units, market watchers expect its Device Solutions division, which oversees the chip business, would record around 5 trillion won in operating profit.

Its mainstream chip business generated an operating profit of 1.91 trillion won for the first quarter, successfully turning into a surplus for the first time in five quarters since the fourth quarter of 2022.

The Mobile eXperience division, which is responsible for smartphones and laptops, is expected to generate an operating profit between 2.1 trillion and 2.3 trillion won. The rise in prices for DRAM and NAND chips, coupled with an increase in cost rates, appears to have led to a slight decline in profitability.

Samsung Display appears to have made an operating profit of around 700 billion won due to strong sales from major customers such as US tech giant Apple.

Due to the peak season for air conditioners, the home appliance division is expected to earn 700 billion won while the video display division is foreseen to log 500 billion in operating profit.

With the surprise earnings guidance, the tech giant's shares renewed its 52-week high of 87,100 won on Friday, up 2.96 percent from the previous session's close.

Samsung Electronics will release a detailed second-quarter earnings report later this month.

By Jie Ye-eun (yeeun@heraldcorp.com)