Samsung flags strong AI demand as profits soar on higher chip prices. “In the second half of 2024, AI servers are expected to take up a larger portion of the (memory) market as major cloud service providers and enterprises expand their AI investments,” Samsung said in a statement.

Samsung’s earnings result

Here are Samsung’s second-quarter results versus analysts’ average estimates according to LSEG.

Samsung revenue: 74.07 trillion Korean won (about $53.45 billion) vs. 73.74 trillion Korean won

Samsung operating profit: 10.44 trillion Korean won vs 9.53 trillion Korean won

The Samsung’s revenue for the quarter ended June jumped 23.42% from a year earlier, while operating profit soared 1,458.2%.

Samsung’s server AI demand

Rebounding semiconductor prices stoked by the AI boom lifted June quarter earnings for the world’s biggest maker of memory chips, smartphones and TVs from a low base a year ago.

The South Korean giant said robust demand for high-bandwidth as well as conventional memory, such as regular dynamic random access memory, from customers expanding AI investments contributed to the strong performance.

For the second half, Samsung said it expects the demand from server AI to stay strong across server products including HBM, server DRAM and SSD. SDD, or solid-state drive, refers to a semiconductor-based storage device.

Samsung expands sales

The firm added that expanding capacity to meet demand for HBM and server DRAM could further constrain supply of conventional memory chips.

During its earnings call, the firm said it plans to address the AI demand by expanding sales of HBM3E the latest AI memory product through capacity expansion in the second half.

It will also expand sales of SSDs which are currently in high demand for AI servers as well.

Memory chip rebound helped Samsung

HBM memory chips are crucial for AI chips, which have seen a huge demand enabled by the AI boom. This has largely benefited firms like Samsung Electronics and SK Hynix, tow of the top memory chipmakers in the world.

Business for Samsung rebounded as memory chip prices recovered on AI optimism last year. The South Korean electronics giant saw record losses in 2023 as the industry reeled from a post-Covid slump in demand for memory chips and electronics.

Samsung reportedly has cleared the tests for the use of its HBM3 chips in Nvidia processors for the Chinese market. SK Hynix has so far led the HBM memory chip market, having been the sole supplier of HBM3 chips to Nvidia.

Decline in smartphone sales

Samsung smartphone sales declined in the Q2 largely because of the “base effect of launches of new models” in the Q1. However, the Galaxy S24 series continued to see strong demand, Samsung said.

Profitability in the smartphone business also dropped as prices of key components rose.

The firm plans to continue pushing its premium Galaxy AI products. In its latest move, Samsung announced last week global availability for its newest Galaxy devices including Galaxy Z Fold6, Z Flip6, Watch Ultra and Ring.

Samsung stock update

The firm also said it would pay out a dividend of 361 won per common and preferred share for the Q2.

“According to our current dividend policy, the total amount distributed per quarter amounts to approximately 2.45 trillion won, which will be paid near the end of August.”

Samsung’s share price rose 0.9% in morning trade versus a 0.5% rise in the benchmark index.

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The National Samsung Electronics Union (NSEU), whose roughly 30,000 members make up almost a quarter of the firm’s South Korean workforce, said it has decided to continue with the striking because management has shown no indication of holding talks after a strike that started on Monday.

Samsung workers union continued strike

“We haven’t spoken to management since we started the strike on Monday,” said Lee Hyun-kuk, the union’s vice president.

The union said it would extend the strike initially planned to last three days through Wednesday. As per Lee, the union found its strike has disrupted production on certain chip lines such as with equipment running more slowly.

Production disruption at Samsung

Samsung previously said the strike has caused no disruption to production. It did not immediately respond to a request for comment on Wednesday.

The union is becoming more vocal and seeking to be treated as an equal partner, adding to challenges at the world’s biggest memory chipmaker which is struggling to navigate competition in chips used for artificial intelligence (AI) applications.

As per analysts, it would be difficult to verify whether the strike has disrupted production unless the union provides details of wafers and processes.

Samsung workers union increasing members

Lee said about 6,500 workers have been participating in the strike and that the union will encourage more members to join.

Union officials have disputed reports of low participation, stating that the five-year-old body did not have enough time to educate members about the labor issues. The union held a training session on Tuesday and will conduct another on Wednesday.

Samsung union’s demands

The union said it has revised demands to include a 3.5% increase in base salary and, instead of an extra day’s annual leave, a day off to mark the union’s founding. Lee said the management previously offered a 3% rise in base salary but the union wants 3.5% to better reflect inflation.

Stock update

Samsung’s share price was down 0.1% versus a 0.2% decline in the benchmark KOSPI at 0139 GMT.

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National Samsung Electronics Union, the largest of the tech giant’s several unions with some 28,000-plus workers says it’s escalating things. The reason the Samsung union gave for rally is because of a breakdown in workers pay talks, after initially seeking a less dramatic resolution.

Samsung workers union

Samsung Electronics Co. workers are expected to walk off assembly lines Monday, beginning the biggest organized labor action in the South Korean conglomerate’s half-century history.

The largest union at Samsung, the nation’s biggest company has spent the past few weeks preparing for the three-day walkout, after negotiations over pay and vacation time collapsed last month. This envisioned action marks an escalation from a single-day strike in early June, the first in Samsung’s 55 years of existence. It’s intended to send a message by disrupting production at one of the company’s most advanced chip facilities, union leaders say.

Union rally to stop production

As per Lee Hyun-kuk, deputy secretary-general of the union, the labor union aims to gather up to 5,000 people for rallies outside Samsung’s semiconductor plants in Hwaseong, about 38 kilometers south of Seoul, at 11 a.m. on Monday. It’s unclear how many workers will actually walk off the job, and markets have so far remained calm. Still, the risk is that the unprecedented action at Samsung may hurt the country’s best-known and wealthiest corporate name and spur similar responses across the tech industry.

“Our goal for this walkout is to disrupt production,” said union leader Son Woo-mok.

Critical time for Samsung

For Samsung, world’s biggest maker of memory chips it can ill-afford turmoil within its ranks at a critical time. It’s now pulling out the stops to convince Nvidia Corp. to use its high-end AI memory chips a prerequisite for staking a larger claim on a booming AI market. In May, it abruptly replaced the head of its semiconductor division, which since 2023 has seen SK Hynix Inc. dominate the crucial high-bandwidth memory, or HBM, chip arena.

“The timing of this strike is particularly critical as it coincides with ongoing semiconductor supply chain challenges,” said Billy Leung, an investment strategist at Global X Management Co., a member of the Mirae Asset Financial Group. Samsung accounts for about 20% of the global DRAM market and around 40% of NAND flash, which is used in smartphones and servers. “Any disruption in Samsung’s operations could have a ripple effect.”

Samsung’s new foldable phones

This week, Samsung’s preparing to unveil new foldable phones and watches as well as a smart ring in Paris ahead of the Olympics, in an attempt to forestall a challenge from Apple Inc. on its global market lead. In Samsung’s favor however is an anticipated rebound in global memory and electronics demand from historic post-Covid era depths: the company on Friday posted a 15-fold surge in earnings, but off a very low 2023 base.

Representatives for Samsung declined to comment on Friday.

South Korea’s Samsung workers strike

Samsung Electronics has long avoided the kind of ground-up turmoil that’s plagued many of Korea’s leading companies from Hyundai Motor Co. to Ssangyong Motor Co. Labor action in the past has occasionally turned violent. Analysts have credited Samsung’s tight control of labor activism as a reason for its success, helping the company dominate the electronics sector from its perch in Suwon for well over a decade. Lee Kun Hee, late chairman of Samsung and father of current leader Jay Y. Lee, went to great lengths to prevent unions from forming.

Samsung’s Q2 operating profit

On Friday a more than 15-fold rise was seen in Samsung estimated Q2 operating profit. This was due to rebounding semiconductor prices driven by the AI boom. This lifted Samsung’s lifted earnings from a low base a year ago. 

Samsung’s share price

Samsung share closed at a price of 87,400 KRW up 0.34% today. Though, Samsung’s share price performance has been lagging behind South Korean chip rival SK Hynix.

The post Samsung Faces Largest Workers Strike in Its History Amid Pay Dispute appeared first on Industry Leaders Magazine.

Samsung Q2 profit soars

The amount of $6.34 billion would be Samsung’s highest profit since the Q3 of 2022. It compares with an operating profit of 670 billion won in second quarter of last year.

Performance at the tech giant Samsung’s key semiconductor division likely continued to improve its second consecutive quarterly profit for Q2. This is as memory chip prices keep rising from a mid-2022 to end-2023 trough that was caused by weak post-pandemic demand for gadgets that use the chips.

Samsung chip market recovery with AI boost

Explosive demand for high-end DRAM chips such as high bandwidth memory (HBM) chips used in AI chipsets, as well as chips used in data center servers and gadgets that run AI services are underpinning a broad recovery in the chip industry, analysts said.

During the second quarter, memory chip prices jumped by about 13% to 18% versus the previous quarter for DRAM chips used in tech devices and 15% to 20% for NAND Flash chips used for data storage, according to data provider TrendForce.

Samsung to compete Apple

Samsung is expected to compete with rival Apple at the top end of the market when it launches its latest flagship foldable phones and mobile accessories, including a new ring for health monitoring, on July 10 in Paris.

 Samsung’s operating profit

Estimated Q2 operating profit at Samsung’s chip division was 4.6 trillion won according to an average of 10 analysts’ forecasts. This compares to a loss of 4.36 trillion won for the same period last year.

Its mobile business likely saw its Q2 operating profit shrink versus last year despite shipping a similar number of smartphones, analysts said, due to steeper parts’ costs and higher marketing and development costs for AI services.

The mobile business likely reported an operating profit of around 2.2 trillion won, according to an average of forecasts from 10 analysts, down from a 3.04 trillion won profit a year ago.

Samsung shares

Samsung shares closed at a price of 84,300 KRW, which is +2,500 (3.06%).

The post Rise in Samsung’s Q2 Profit on AI Boom, Can It Beat Apple? appeared first on Industry Leaders Magazine.

Son Woo-mok, leader of the union, said late on Monday that the South Korea labor strike is for wanting a more transparent system for bonuses and time off. Also the workers wants the company to treat it as an equal partner.

Samsung declined to comment on the union’s strike plan.

Samsung workers strike

Union membership increased rapidly after Samsung in 2020 pledged to stop discouraging the growth of organized labor.

The Samsung workers strike itself is unlikely to have a major impact on chip output as most production at the world’s biggest memory chipmaker is automated.

South Korea’s labor strikes impact on production

Any impact on production will ultimately depend on how many people that operate chip plants participate and for how long, said senior researcher Kim Yang-Paeng at the Korea Institute for Industrial Economics and Trade.

“Chip production cannot proceed with replacement workers” if people who operate the automated machines walked out for a long time “because of the specificity and expertise of the work,” Kim said.

Earlier Samsung union’s protest

Last month, workers en masse took annual leave on the same day in what was effectively the union’s first industrial action. At the time, Samsung said there was no impact on production or business activity. Those striking were mainly employed at inner-city offices rather than at manufacturing sites, analysts said.

“This planned strike marks a turning point in Samsung’s history of non-union management. This could be seen as a drop in employee loyalty at Samsung … caused by wages and disappointing compensation compared to Samsung’s rivals,” a Seoul-based analyst said on Tuesday, declining to be identified as details of the strike were unknown.

Samsung stock update

Samsung’s share price was unaffected, rising 0.1% in morning trade versus a 0.7% decline in the benchmark price index.

The post Samsung Workers’ Union Calls for 3-Day Strike as Talks Break Down appeared first on Industry Leaders Magazine.