On July 5, Samsung Electronics announced its second-quarter 2024 performance guidance, predicting that its second-quarter operating profit will be about 10.4 trillion won, a year-on-year increase of 1452.2% and a month-on-month increase of 57.3%, far exceeding the previous market forecast of 8.8 trillion won; revenue is expected to be about 74 trillion won, a year-on-year increase of 23.3% and a month-on-month increase of 2.89%. Samsung Electronics' full second-quarter financial report is expected to be released at the end of this month.

01 Experts' opinion

Li Guoqiang, a veteran semiconductor expert, believes that the main reason why Samsung Electronics' revenue and profit increased so much in the second quarter is that memory prices were at a low point last year. At that time, Samsung Electronics adopted a business strategy of "maintaining profits and reducing revenue" by controlling capacity utilization. Now that market demand has recovered, Samsung Electronics has raised the prices of its storage products several times this year. The two have jointly promoted Samsung Electronics' continuous and substantial growth in revenue and profits in recent years. According to data from TrendForce, DRAM chip prices increased by 13% to 18% in the second quarter of this year, and NAND Flash chip prices increased by 15% to 20%. At the same time, the AI craze has significantly promoted the price of HBM.

Samsung Electronics' first quarter 2024 business unit financial report data

 (Image source: Samsung Electronics 2024 first quarter financial report)

According to Samsung Electronics' first quarter 2024 financial report, the Device Solutions Division (DS Division), which is responsible for memory and mobile application processors, had revenue of 23.14 trillion won, a year-on-year increase of 68%, of which the storage business had revenue of 17.49 trillion won, an increase of 96%. However, Samsung Electronics' overall revenue growth in the first quarter of 2024 was only 13%. In terms of revenue and profit, the Device Solutions Division grew by 6.50 trillion won year-on-year, which was also higher than Samsung Electronics' overall growth of 5.97 trillion won. Such a difference in growth shows that the storage business is Samsung Electronics' biggest growth point in recent years, and has driven the overall growth of Samsung Electronics while other businesses are losing money. Many institutions predict that Samsung's electronic equipment solutions division will have an operating profit of 4.6 to 5.1 trillion won in the second quarter, an increase of 141% to 167% compared to 1.91 trillion won in the first quarter.

In addition, the reporter learned in the interview that after the mobile phone inventory reduction cycle ended, the mobile phone business also brought a lot of profits to Samsung Electronics. "Samsung Electronics' mobile phone shipments are one of the main drivers of Samsung Electronics' revenue growth," said Li Guoqiang. According to a report by market analysis agency Canalys, Samsung Electronics' mobile phone shipments reached 60 million units in the first quarter of 2024, returning to the top position in the world.

At the close of July 5, Samsung Electronics was 87,100 won per share, up 2.96%, the highest share price since 2021.

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