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After a year of declining profits, Samsung, world leader in memory chips used for temporary data storage, has announced exceptionally high financial results for 2024. This spectacular recovery is largely attributable to the growing demand for semiconductors, fuelled by the rapid development of artificial intelligence technologies. Indeed, technology companies around the world are vying for leadership in AI, which has led to a steady rise in semiconductor prices, benefiting Samsung.
In the first quarter of 2024, Samsung posted a profit of $4.9 billion, ten times more than in the first quarter of the previous year. But this is only the beginning. Forecasts for the second quarter are even more optimistic, with profits reaching $7.5 billion and sales up 23% on 2023. This meteoric growth in profits underscores Samsung's dominant position in the semiconductor market, a key sector for AI technologies.
The rise of artificial intelligence has transformed the global technological landscape. Samsung's memory chips are crucial to the operation of AI systems, which require high-performance data processing and storage capabilities. This demand has propelled Samsung to new financial heights, reinforcing its role as the undisputed leader in semiconductors.
Despite these excellent results in the chip sector, Samsung is facing challenges in its smartphone division. Profit margins declined due to higher material costs and marketing expenses. Nevertheless, sales of Samsung's flagship models, notably the Galaxy S24, remain strong. This shows that, despite financial pressures, the brand continues to attract consumers with its quality products.
To maintain its momentum and counter growing competition from Chinese manufacturers such as Xiaomi and Huawei, Samsung plans to launch its latest models of high-end foldable phones on July 10 in Paris. These new devices will be equipped with advanced artificial intelligence features, strengthening Samsung's appeal in the high-margin smartphone market. Combining technological innovation and sophisticated design, these foldable phones are designed to appeal to consumers looking for premium products.
However, this financial success comes against a backdrop of growing social tensions within the company. Unions representing some 28,000 Samsung employees have threatened to launch a new three-day strike from July 8, following a first strike on June 7. This mobilization is the first in the fifty-year history of Samsung, a company renowned for its stability. The unions are demanding pay rises and more days off, demands that reflect growing dissatisfaction among employees.
Samsung's ability to manage these internal conflicts will be crucial to its future. While current financial performance is remarkable, employee satisfaction and well-being are essential to maintaining long-term productivity and innovation. Samsung will have to strike a balance between meeting employee expectations and pursuing its growth and profitability objectives.
Samsung's journey to 2024 is a shining example of resilience and adaptability in an ever-changing technology sector. The artificial intelligence boom offered the company an unprecedented opportunity to re-establish its position as world leader after a period of declining profits. However, internal challenges and increased competition demand a well-thought-out strategy and careful management.
The next few months will be crucial for Samsung. The success of its new products, the progress of negotiations with the unions and the company's response to changing market dynamics will define its future trajectory. Nevertheless, according to Peers, with record profits and a strengthened position in the semiconductor market, Samsung is well placed to continue playing a central role in the global technology landscape.
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