[Anchor]
Driven by the AI semiconductor boom, Samsung Electronics has once again posted record-high earnings. The company projected that the semiconductor supply shortage will continue until the year after next. While global big tech companies have reaffirmed their commitment to expanding AI investments, concerns remain over whether such high levels of investment can be sustained.
Reporter Jeong Seong-jin has the details.
[Reporter]
Samsung Electronics renewed its record highs in the second quarter, logging 171.5 trillion won in revenue and 89.5 trillion won in operating profit.
The stellar performance was once again led by semiconductors.
The semiconductor division posted 89.2 trillion won in operating profit, accounting for over 99 percent of the total.
On the other hand, finished product divisions such as mobile and home appliances saw revenue grow by 14 percent, but recorded an operating loss of 800 billion won.
This marks their first-ever deficit, driven by the so-called chipflation caused by soaring semiconductor manufacturing costs.
Samsung Electronics forecast that the semiconductor supply crunch will worsen next year and persist through 2028.
As the basis for this outlook, the company noted that requests for long-term supply contracts from global big tech firms continue to pour in, adding that up to 70 percent of its total production capacity could be locked into long-term contracts.
[Kim Jae-june, Executive Vice President and Head of Memory Global Sales & Marketing, Samsung Electronics (Q2 Earnings Conference Call): We have already completed contracts with our top five global data center customers and are in the final stages of negotiation with five additional major customers tied to AI demand.]
Global big tech companies also reaffirmed their expansion of AI investments, backing up robust semiconductor demand.
Microsoft and Meta reported capital expenditures allocated for AI investments and other areas increased by 69 percent and 83 percent, respectively, compared to last year, investing around 50 trillion won each.
However, signs of vulnerability were also observed.
Meta's free cash flow shrank by more than 90 percent from a year ago.
Nearly all the cash generated from operating activities was funneled into AI investments.
Previously, Google's parent company Alphabet also saw its free cash flow turn negative, fueling questions over the sustainability of these investments.
[Park Sang-hyun, Research Fellow at iM Securities: Recently, big tech investments are ultimately being perceived as relying on borrowing, meaning that risks related to debt are continuously being kept in mind...]
Although the U.S. Federal Reserve has frozen interest rates this time, the possibility of future rate hikes remains, meaning market concerns surrounding big tech's burden in financing AI investments are likely to persist.
(Video Editing: Kim Jun-hee, Design: Choi Jin-hoe)
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