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The AI boom has proven to be both a blessing and a curse for Samsung. On the one hand, the South Korean technology giant delivered one of its strongest quarters in history. And on the other hand, investors wiped more than US$80 billion off its market value amid growing concerns that the AI spending frenzy may be approaching a turning point.<\/p>\n
Samsung is forecasting a 19x increase in second-quarter operating profit,<\/b> a figure so strong that it surpassed the company\u2019s combined earnings over the previous three years. The results underscore how the AI revolution has transformed the memory industry from one plagued by oversupply into one struggling to keep up with demand.<\/p>\n
The primary driver behind Samsung\u2019s earnings surge was the sharp increase in memory chip prices. According to Citi Research, average selling prices for DRAM and NAND flash memory rose by 44% and 53% quarter-on-quarter, respectively.<\/p>\n
The unprecedented demand for AI servers<\/b>, accelerators, and high-performance computing systems has created intense competition for memory chips, which are essential for training and running large AI models. As the world\u2019s largest memory chipmaker by sales, Samsung has been among the biggest beneficiaries of the trend.<\/p>\n
However, the market\u2019s reaction suggests investors are looking beyond the current boom. Despite the blockbuster earnings, Samsung\u2019s shares fell sharply, wiping more than US$80 billion from the company\u2019s market capitalisation<\/b>. Investors appear increasingly concerned that the pace of AI infrastructure spending may not be sustainable over the long term.<\/p>\n
Over the past two years, technology companies have committed hundreds of billions of dollars to building AI data centres and computing infrastructure. While those investments have fuelled record demand for semiconductors, some investors are now questioning whether spending will eventually moderate as companies evaluate the returns on those massive capital expenditures.<\/p>\n
The concern is not that AI demand will disappear, but rather that growth could slow from today\u2019s extraordinary levels. Even a modest pullback in infrastructure spending could affect memory pricing, particularly after the steep gains seen this year.<\/p>\n
For now, memory makers continue to enjoy strong pricing power, but investors are increasingly focused on what happens when the industry\u2019s biggest customers begin shifting from building AI infrastructure to monetising it.<\/p>\n
Source: Reuters<\/p>\n<\/div>\n
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