Samsung made recordImage Credit source: GettyImages
South Korea's tech giant Samsung Electronics has created history and achieved $1 trillion market valuation. The strong demand for Artificial Intelligence (AI) chips has made the company's shares rocket. Samsung reached this milestone amidst increasing investor confidence and global tech rally, due to which tremendous enthusiasm was seen in the Asian markets.
Amidst the AI revolution, another big milestone has been added in the tech world. Samsung Electronics has achieved $1 trillion market cap, making it the second Asian company to join this club after Taiwan Semiconductor Manufacturing Company.
Why did the value increase?
The biggest reason behind this historic achievement is the increasing demand for AI chips. The company's shares have jumped more than four times in the last one year. Shares saw a rise of about 11% in early trading on Wednesday, taking Korea's main index KOSPI beyond 7,000. Samsung, SK Hynix and TSMC together have become the center of the global AI supply chain. The growing needs of data centers, cloud computing and machine learning have taken the demand for memory chips, especially DRAM and NAND, to new heights.
Company's record profit increases
Recently, the company's semiconductor unit recorded record profit in the March quarter, which was possible due to large orders received from AI Data Center. The increase of up to 48 times in profits surprised investors. Analysts believe that due to limited supply, the prices of chips will remain high in future, due to which the company will continue to benefit. Interestingly, Apple is also in initial talks with Samsung for manufacturing its processors. If this deal goes ahead, Apple may get the option to reduce its dependence on TSMC.
The challenges before the company are also no less. The mobile and display business is witnessing a decline, while the rising cost of raw materials is creating pressure. At the same time, amidst the huge earnings from AI, the employees have intensified their demand for salary increase and have also warned of a strike. Despite this, market experts believe that there is still scope for further growth of up to 30% in Samsung shares. The current valuation is also lower than the historical level, which remains attractive for investors.
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