Samsung Q2 Profit Soars 1458.2% as Semiconductor Sales Surge

On July 31, Samsung Electronics announced its outstanding Q2 2024 financial results, driven by increased demand and rising prices in the memory chip market. The company's operating profit soared nearly 15 times year-on-year, with expectations for continued strong demand for memory chips in the second half of the year, fueled by AI advancements. Samsung's stock price rose by 3.58%, closing at 83,900 KRW per share.

Specifically, Samsung's Q2 revenue grew by 23.42% year-on-year to 74.07 trillion KRW (approximately 388.1 billion RMB), slightly surpassing market expectations of 73.74 trillion KRW. Operating profit skyrocketed by 1458.2% year-on-year to 10.4 trillion KRW (approximately 54.7 billion RMB), exceeding market expectations of 9.53 trillion KRW. This marks Samsung's highest operating profit since Q3 2022.

1. Semiconductor Business Revenue Soars 94%

Samsung's Digital Solutions (DS) division, responsible for semiconductor operations, reported Q2 sales of 28.56 trillion KRW, a 94% increase year-over-year and a 23% rise from the previous quarter. Operating profit for this segment reached 6.45 trillion KRW, reversing previous losses and surging 237.7% sequentially.

Memory Chips

In the memory chip sector alone, Q2 revenue amounted to 21.74 trillion KRW, marking a 24% increase year-over-year and a 142% jump from the previous quarter. Samsung highlighted the strong recovery in the memory chip market, driven by high demand for HBM (High Bandwidth Memory), traditional DRAM, and server SSDs. Samsung has reinforced its leadership in the DDR5 market by producing large quantities of 128GB products based on 1b-nm 32Gb DDR5, a first in the industry.

Rumors suggest that Samsung’s HBM3e has been certified by NVIDIA, with large-scale shipments expected to begin in the latter half of the year. Samsung plans to meet the growing demand for high-value AI products by expanding production and increasing the sales share of HBM3e. Additionally, Samsung will focus on high-density products, such as server modules based on 1b-nm 32Gb DDR5.

In NAND technology, Samsung aims to boost sales by increasing the supply of triple-level cell (TLC) SSDs, which remain a key component for AI applications. The company will also address the demand for quad-level cell (QLC) products optimized for various applications, including servers, PCs, and mobile devices. As capacity focuses on HBM, server DRAM, and SSDs for AI applications, Samsung anticipates limited supply of traditional storage products for high-end PCs and mobile devices in the latter half of the year.

System LSI Business

Although Samsung did not disclose specific Q2 figures for its System LSI business, it reported record sales for the first half of the year. This growth is attributed to increased supply of key components for flagship products like the Galaxy S24 series, including SoCs, image sensors, and display driver ICs (DDIs), which contributed to improved Q2 earnings.

In the wafer foundry sector, increased demand for various applications led to improved Q2 revenue. Notably, the number of AI and high-performance computing (HPC) clients doubled year-over-year due to rising orders for sub-5nm technologies. Samsung recently launched the industry's first 3nm technology wearable SoC, with expectations for increased adoption in the latter half of the year. The company is also focusing on ensuring stable supply of its flagship Exynos 2500 model and has distributed process development kits (PDKs) for 2nm gate-all-around (GAA) technology ahead of mass production in 2025. Samsung plans to expand AI/HPC orders and aims to quadruple its client base and increase sales ninefold by 2028.

2. DX Division Revenue Up 5% Year-Over-Year

Samsung's Device eXperience (DX) division reported Q2 sales of 42.07 trillion KRW, a 5% increase year-over-year but an 11% decrease from the previous quarter. Operating profit stood at 2.72 trillion KRW.

MX Business

The Mobile eXperience (MX) business, encompassing smartphones, generated Q2 sales of 27.3 trillion KRW, an 8% increase year-over-year but a 19% decline from the previous quarter. Profitability in the smartphone sector decreased due to rising component costs, leading to a drop in MX division operating profit to 2.23 trillion KRW from 3.04 trillion KRW in the same period last year and 3.51 trillion KRW in Q1. Smartphone shipments are expected to rise in Q3, while tablet shipments are projected to remain stable.

Visual Display and Digital Appliances

Samsung’s visual display and digital appliances business reported combined Q2 revenue of 14.42 trillion KRW, a 0.2% increase year-over-year and a 7% rise from the previous quarter. Operating profit was 0.49 trillion KRW. The visual display segment maintained its high-end market leadership by focusing on strategic products such as Neo QLED, OLED, and Lifestyle screens. However, profitability declined due to higher panel prices and intensified market competition. The latter half of 2024 is expected to see continued recovery in overall market demand, driven by growing demand for QLED, OLED, and large-screen TVs. Samsung will implement a sales plan centered on premium and large-size TVs and promote competitive features such as AI, security, and design through Samsung SmartThings.

3. Samsung Display Corporation (SDC)

Samsung Display's (SDC) Q2 consolidated sales reached 7.65 trillion KRW, an 18% increase year-over-year and a 42% rise from the previous quarter. Operating profit was 1.01 trillion KRW. Sales of high-resolution, high-refresh-rate displays, particularly in the gaming monitor market, saw expansion, while TV sales in the high-end market remained stable due to increased OLED panel penetration.

SDC is manufacturing products with enhanced performance in power consumption, brightness, slim design, and durability. The company plans to expand sales and profitability by focusing on high-value products and introducing new displays with varying refresh rates.

4. Harman

The Harman division, acquired by Samsung several years ago, generated Q2 sales of 3.62 trillion KRW, up 4% year-over-year and 13% from the previous quarter. Operating profit was 0.32 trillion KRW.