Samsung reached a valuation of $1 trillion on Wednesday, with the South Korean tech giant’s shares soaring more than 10% on the back of an artificial intelligence craze boosting chip demand. With this achievement, Samsung became the second Asian company to surpass the $1 trillion threshold following TSMC.
The news follows a blockbuster earnings report last week in which Samsung posted profits eight times higher than the same period a year ago.
Every company building AI today needs chips, and Samsung makes the memory chips that power these AI systems. Demand surges and supply has difficulty keeping up, causing prices to rise and Samsung’s profits to increase.
There’s another reason stocks soared on Wednesday. Yesterday, it was reported that Apple was in talks with Samsung and Intel to manufacture chips for Apple devices on American soil. Apple has long relied almost entirely on Taiwan’s TSMC for chip production. If Samsung completes this contract, there will be major changes in the global semiconductor supply chain.
At the heart of Samsung’s profit surge is high-bandwidth memory (HBM), a type of chip critical for running AI systems, which has dramatically improved the company’s margins. But competition is fierce. Rival SK Hynix, a South Korean semiconductor giant, is competing aggressively for the same market, putting pressure on Samsung to maintain its lead.
The AI boom is causing chip shortages across the semiconductor industry as the world’s three largest memory chip manufacturers – Samsung, SK Hynix and Micron – struggle to meet the surging demand for AI data centers. All three companies have divested their consumer chip businesses to deliver much higher margins and ramp up production of HBM, which is essential for powering large-scale AI infrastructure.
Despite Wednesday’s historic surge, Samsung still faces headwinds. Workers are threatening an 18-day strike later this month over a bigger share of the AI windfall. Meanwhile, the company’s phone and TV divisions, which must buy the same memory chips to make their products, are paying steep prices for the same chips that underpin Samsung’s record profits.
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