Samsung Electronics' Stock Plummets Despite 19-fold Operating Profit Increase... Direct Hit from Foundry Slump

▲ Source: Samsung Electronics X account

Samsung Electronics announced an earnings forecast of a 19-fold surge in operating profit for the second quarter, but its stock price plummeted by more than 6%. Despite the AI semiconductor boom, concerns about the stock price, which had risen fivefold over the past year, and the sluggishness of the foundry business stimulated profit-taking.

According to crypto media outlet BeInCrypto on July 7 (local time), Samsung Electronics projected its second-quarter operating profit to increase 19-fold to 89.4 trillion won. This figure exceeded market expectations and marks a record-high performance for three consecutive quarters. However, Samsung Electronics' stock price fell by more than 6% in early trading on Tuesday.

Samsung Electronics' operating profit forecast surpassed both LSEG SmartEstimate's 87.3 trillion won and FnGuide's consensus of 84.4 trillion won. Revenue was projected to increase by 129% year-on-year to 171 trillion won. However, this fell short of market expectations of 173.3 trillion won.

According to Citi Research, DRAM prices rose by 44% quarter-on-quarter, and NAND flash prices increased by 53%. This is a result of AI investments expanding beyond High Bandwidth Memory (HBM) to general semiconductors for smartphones, personal computers, and servers. The expansion of HBM production also put pressure on the supply of general memory, leading to continued strong prices.

Behind the sharp fall in stock prices were profit-taking and concerns about the non-memory business. Samsung Electronics' stock price had risen fivefold over the past year. Prospects of increasing losses in the foundry and logic semiconductor divisions also weighed on investor sentiment. The fact that incentive costs were reflected across the entire semiconductor division was also cited as a burden.

Samsung Electronics will disclose detailed performance by business division on July 30. While it announced plans to invest 2,100 trillion won in domestic investments by 2040, it intends to adjust the scale of expenditure according to market conditions. BeInCrypto analyzed that the memory boom could structurally continue as new semiconductor production facilities take several years to build, while also pointing to a slowdown in AI data center investment as a major risk.

[Article Summary]

-Samsung Electronics projected its second-quarter operating profit to increase 19-fold to 89.4 trillion won, but its stock price fell by more than 6%.

-DRAM and NAND flash prices rose by 44% and 53% quarter-on-quarter, respectively, reflecting the expansion of AI-driven semiconductor demand.

-Profit-taking due to the stock price rising fivefold over the past year, coupled with concerns about increasing losses in the foundry and logic semiconductor divisions, put pressure on the stock price.

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