Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.Samsung Electronics expects a greater than 15-fold improve in second-quarter working revenue as reminiscence chip costs proceed their restoration from final yr’s droop on sturdy demand for synthetic intelligence merchandise. The stronger than anticipated steering on Friday underscores a increase in knowledge centres and AI improvement as large tech firms race to develop their very own superior AI fashions, sparking demand for cutting-edge D-Ram chips reminiscent of high-bandwidth reminiscence. The world’s largest maker of reminiscence chips by gross sales estimated working revenue jumped 1,452 per cent to Won10.4tn ($7.5bn) in preliminary numbers for the April-June quarter, the best since its third quarter of 2022. The determine was significantly better than analysts’ expectations of Won8.8tn, based on LSEG SmartEstimates. Gross sales are anticipated to have elevated 23 per cent to Won74tn from a yr earlier.Samsung’s mainstay chip division is estimated by analysts to have posted an working revenue of as much as Won5tn within the second quarter, in contrast with a Won4.4tn loss a yr earlier. Sturdy chip earnings had made up for deteriorating margins within the smartphone enterprise, analysts stated. Samsung’s flagship S24 smartphones with synthetic intelligence options are promoting nicely, however greater materials and advertising and marketing prices are consuming into the division’s earnings. Samsung plans to launch its newest foldable telephones, with AI options, subsequent week in Paris to stave off rising competitors from Chinese language rivals within the high-margin section. “Reminiscence chip costs are rising greater than anticipated, offsetting falling margins within the smartphone enterprise,” Pak Yuak, an analyst at Kiwoom Securities, stated in a current report.D-Ram chip costs rose by 13 to 18 per cent within the second quarter whereas costs of Nand flash reminiscence chips used for knowledge storage gained 15 to twenty per cent, based on market researcher TrendForce.Samsung shares gained 1.4 per cent on Friday morning, buoyed by the upbeat steering, however they’ve lagged behind rivals on concern about its competitiveness in HBM chips. Samsung shares have risen about 9 per cent this yr, underperforming a 62.5 per cent rally for home rival SK Hynix. Samsung has been struggling to meet up with SK Hynix and Micron Expertise of the US in mass producing probably the most superior HBM chips. Each SK Hynix and Micron, which provide HBM chips to Nvidia, stated their capability for HBM chips was bought out for this yr and subsequent. Samsung’s HBM chips are but to go Nvidia’s qualification checks, with its chief government Jensen Huang saying final month that extra engineering work was wanted.The sturdy preliminary outcomes come as Samsung’s 28,000-strong labour union threatens to launch a three-day strike on Monday, demanding greater wages and extra holidays, compounding the challenges that the tech group faces.The labour union blamed Samsung’s administration for the corporate’s current weak efficiency. Samsung changed its semiconductor chief final month in an effort to beat what it has described as a “chip disaster” and chair Lee Jae-yong took a two-week journey to the US final month and met the heads of main purchasers together with Meta, Qualcomm and Amazon to debate co-operation in chips, AI and cloud companies.Samsung has promoted its “one-stop service” for purchasers to attempt to slender the hole with TSMC in contract chipmaking, saying it will possibly assist clients make their AI chips quicker by integrating its reminiscence chip, foundry and chip packaging companies. However some tech firms stay nervous about giving orders to Samsung as they compete with it in different fields.Many analysts anticipate Samsung to begin supplying HBM chips to Nvidia within the second half of this yr, however some stay sceptical about the corporate’s long-term enterprise prospects. “The corporate is in bother when it comes to its technological competitiveness as quite a lot of prime expertise proceed to depart the corporate,” stated Park Ju-geun, the pinnacle of enterprise analysis group Leaders Index. “The issue is unlikely to be resolved anytime quickly as I don’t see any clear management or technique to show issues round.”