Samsung Electronics achieved a record quarterly operating profit in the second quarter of this year, surpassing all global big tech companies. The surge in prices and demand for memory semiconductors, including DRAM, NAND flash, and high-bandwidth memory (HBM), driven by the expansion of artificial intelligence (AI) infrastructure, resulted in an operating profit of 150 trillion won for the first half of the year. Expectations for continued strength in memory prices and expanded HBM4 supply in the second half 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 a 1,810.3% increase 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 1,186% increase 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 largest quarterly result among global private tech companies. Nvidia and Apple previously reported their highest 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 such as performance bonuses, Samsung surpassed these companies' previous records.
Considering the performance bonus provisions, Samsung's actual profit-generating capacity is even greater. In May, the company and its labor union 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 oversees semiconductor operations. As a result, provisions for performance bonuses of about 6 trillion won from the first quarter and approximately 11 trillion won from the second quarter, totaling around 17 trillion won, were reflected in the second quarter results. Before these provisions, the estimated operating profit for the second quarter was about 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 risen sharply, while supply has struggled to keep pace, leading to a rapid increase in memory prices.
Prices for DRAM and NAND rose by 80-85% in the first quarter compared to the previous quarter and surged by around 50% in the second quarter. Market research firm Counterpoint Research estimates that the global memory market size in the second quarter will reach 350 trillion won, an increase of over 60% from the previous quarter. The upward trend in memory semiconductor prices is expected to continue in the second half. Market research firm TrendForce predicts that DRAM prices, which have already reached an all-time high, will rise an additional 13-18% in the third quarter.
The expansion of profitability due to rising semiconductor prices is likely to persist for the foreseeable future. As memory prices soar, customers are increasing long-term supply agreements (LTA) to secure stable volumes. In the second quarter, the proportion of LTAs in Samsung's memory supply contracts was about 30%, and this is expected to increase in the third quarter.
The contribution of HBM, a high-margin product, is expected to grow even more in the second half. 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 (approximately 1.5 trillion won). Recent reports indicate that cumulative sales have exceeded $1.2 billion (about 1.85 trillion won). HBM4 is set to be integrated into Nvidia's next-generation AI accelerator, 'Lovelace,' which is expected to 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, foresee annual operating profit estimates reaching 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.
* This article has been translated by AI.
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