Samsung was valued at $1 trillion on Wednesday, with the South Korean tech giant’s shares soaring more than 10% as demand for chips fueled by the ongoing artificial intelligence craze. This milestone makes Samsung the second Asian company to cross the $1 trillion threshold after TSMC.
The news comes on the heels of Samsung’s blockbuster earnings report last week, in which it reported an eight-fold increase in profit compared to the same period last year.
Every company building AI now needs chips, and Samsung makes the memory chips that power those AI systems. As demand soars, supply cannot keep up, pushing up prices and boosting Samsung’s profits.
There’s another reason why stock prices soared on Wednesday. Yesterday, reports emerged that Apple is in talks with both Samsung and Intel to manufacture chips for Apple devices in the United States. Apple has long relied almost exclusively on Taiwan’s TSMC for chip production. If Samsung closes the deal, it would mark a major shift in the global semiconductor supply chain.
At the heart of Samsung’s profit boom is high-bandwidth memory (HBM), a type of chip essential to running AI systems, which has dramatically increased the company’s profit margins. However, competition is fierce. Rival South Korean semiconductor giant SK Hynix is fiercely competing for the same market and continues to pressure Samsung to maintain its dominance.
The AI boom is causing a chip shortage across the semiconductor industry, as the world’s three largest memory chip makers – Samsung, SK Hynix and Micron – struggle to meet runaway demand from AI data centers. All three companies are pulling investment from their consumer chip businesses to expand HBM production. HBM is significantly more profitable and has become essential for powering large-scale AI infrastructure.
Despite Wednesday’s historic rally, Samsung still faces headwinds. The workers are threatening an 18-day strike later this month to demand an increase in some of the AI benefits. Meanwhile, the company’s mobile phone and TV divisions also need to buy the same memory chips to make their products, paying a high price for the same chips that underpin Samsung’s record profits.
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