Samsung Electronics is more likely to estimate that its working revenue jumped about 18-fold to a different report excessive from a 12 months earlier within the second quarter, as AI progress continues to pressure reminiscence provide and push chip costs greater.
On Tuesday, the world’s largest reminiscence chipmaker by gross sales is more likely to flag an working revenue of 86 trillion gained ($56.35 billion) for the April to June quarter, in response to an LSEG SmartEstimate primarily based on forecasts from 30 analysts, weighted towards these with the very best monitor information.
Up from 4.7 trillion gained a 12 months earlier, this would mark a 3rd consecutive quarter of report working revenue for Samsung, reflecting a chronic reminiscence scarcity, as booming demand for AI inference infrastructure continues to outpace provide progress from world reminiscence producers.
Analysts anticipate the reminiscence market to stay undersupplied at the least by means of subsequent 12 months.
The strong progress has been pushed not solely by high-bandwidth reminiscence (HBM), but additionally by stronger demand for standard DRAM and NAND merchandise as AI purposes, notably agentic AI, broaden right into a broader vary of computing workloads.
In contrast to earlier AI purposes centered primarily on coaching giant fashions, agentic AI programs carry out extra advanced, multi-step duties that require further reminiscence for server processors and better storage capability to retain and retrieve knowledge throughout inference, analysts mentioned.
Samsung is a key provider of reminiscence chips to main expertise corporations together with Nvidia, Google and Apple.
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Citi Analysis on Thursday mentioned common promoting costs for DRAM and NAND rose 44% and 53% quarter-on-quarter, respectively, within the second quarter.
The continued reminiscence scarcity has fuelled a large rally in reminiscence chipmakers’ shares, with Samsung Electronics, SK Hynix and Micron hovering 158%, 273% and 242%, respectively, this 12 months, driving all three corporations’ market valuations above $1 trillion.
Chip employee’s bonuses might defy forecasts
Regardless of the sturdy working backdrop, analysts cautioned that the second-quarter earnings might fall in need of consensus if Samsung books a larger-than-expected provision for worker bonuses in the course of the quarter.
In late Could, Samsung averted a large-scale strike, reaching a wage deal that allocates 10.5% of the semiconductor division’s working revenue to particular bonuses for chip workers. Some analysts estimate Samsung’s cumulative bonus provisions might exceed 40 trillion gained, making the timing of accounting recognition a key variable for second-quarter earnings.
Samsung will announce detailed earnings later this month.
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Dangers to observe
Trying forward, analysts see potential delays to AI infrastructure funding as the largest threat to the present reminiscence growth.
JPMorgan mentioned in a latest be aware that whereas buyers broadly agreed reminiscence supply-demand fundamentals remained tight, many questioned whether or not AI reminiscence’s quickly rising share of cloud service suppliers’ capital expenditure — estimated at 52% this 12 months and anticipated to exceed 70% subsequent 12 months — can be sustainable.
Any drop in AI spending might come again to hang-out Samsung and SK Hynix, which final week pledged to speculate 3,200 trillion gained ($2.07 trillion) to broaden chip capability in South Korea. Samsung expects to make that funding between 2026 and 2040, whereas SK Hynix gave no detailed timeframe.
Buyers are in search of clearer proof that breakthroughs in AI companies will translate into sooner progress in cloud computing and associated AI revenues, serving to justify reminiscence’s increasing share of AI infrastructure spending, JPMorgan mentioned.
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The world’s prime reminiscence chipmaker by gross sales mentioned in April it has signed multi-year binding contracts with prospects hoping to lock in provides, with out disclosing identities or phrases.
Nomura mentioned in a latest report that it expects commodity DRAM costs to rise 24% quarter-on-quarter and NAND costs to extend 25% within the July-September quarter, supported by greater demand for shopper reminiscence merchandise and chips for conventional and AI knowledge facilities.
In the meantime, Samsung’s cell enterprise faces mounting price pressures as rising reminiscence costs have squeezed its margins, with greater part prices greater than offsetting latest handset value will increase.
Though Samsung has already raised smartphone costs, analysts mentioned additional value will increase could also be wanted within the second half of the 12 months. Rival Apple raised costs of iPads and MacBooks final month.