Samsung is officially a trillion dollar company now as AI boom fuels profit

Samsung Electronics is now the second Asian company to surpass a $1 trillion market cap. The Korean giant's shares increased by over 12 per cent on Wednesday as the AI-driven demand for memory chips continues to boost Samsung's earnings.

In Short

• Samsung reaches $1 trillion market valuation
• The Korean giant becomes second Asian company after TSMC to reach this cap
• AI-driven memory demand likely behind this rise in value

Samsung Electronics achieved a major milestone on Wednesday after it crossed a market valuation of $1 trillion. This makes the Korean giant only the second Asian company after Taiwan’s TSMC to cross this valuation. It is believed that the demand for memory chips, particularly, particularly for AI data centres, continues to lift investor sentiment.

During early trading in Seoul, Samsung’s market value touched about 1,500 trillion won, or roughly $1.03 trillion. At the time of writing, Samsung’s shares were at a gain of around 14 per cent.

This makes Samsung the 11th company in the world to cross a $1 trillion valuation. Other companies that have crossed this cap include the likes of Apple, Amazon, Meta, Microsoft and Google’s parent company Alphabet.

Is AI behind Samsung’s $1 trillion market cap?

Apart from selling appliances such as TVs or smartphones, Samsung also manufactures different components, including displays, camera sensors, and more importantly memory chips. In fact, Samsung is the world’s largest chipmaker.

And the rise in demand for memory chips for AI data centres has boosted Samsung’s finances. In its recent quarterly earnings, Samsung’s semiconductor arm reported a historic quarterly profit, with a 48-fold jump as AI data-centre orders delivered strong margins.

Company-wide, Samsung said operating profit rose more than eight times to 57.2 trillion won, while revenue climbed to a record 133.9 trillion won.

Do note that the three major memory makers in the world – Samsung, SK Hynix and Micron – have been central to the AI-driven surge in Asian chip stocks, with investors betting on sustained demand for advanced chips, and data-centre capacity.

Next-gen memory

A large part of the market focus has been on high-bandwidth memory, or HBM. HBM is built to move large amounts of data quickly, something that is necessary for AI workloads.

In February this year, Samsung revealed that it had begun mass production of HBM4, the latest generation of the technology, and started deliveries to select customers. The Korean giant has also reportedly started making samples of LPDDR6X RAM, the next-generation RAM that you can expect to see in smartphones in the near future.

Do note that Samsung does face challenges. Samsung employees reportedly threatened an 18-day general strike earlier this month as they seek a larger share of the company’s growing profits. Though as per Bloomberg, the Samsung share is expected to increase by a further 30 per cent in the next 12 months.

- Ends