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Samsung Electronics is now worth USD 1 trillion, joining a tiny club of the world’s most valuable companies, after a global rush to build artificial intelligence (AI) systems sent demand for its computer chips soaring.

The South Korean company’s shares jumped 11 per cent on Wednesday, May 6, completing a stunning four-fold rise over the past year. It is only the second Asian company ever to hit this valuation after Taiwan’s TSMC.

Why chips are suddenly so valuable

Every AI application – from ChatGPT to self-driving cars – needs vast amounts of memory chips to function. Samsung makes more of these chips than almost anyone else in the world, which means the AI boom has been extraordinarily good for its business.

In the first three months of this year, Samsung’s chip division earned 48 times more profit than it did in the same period last year. Companies building AI data centres are buying chips as fast as Samsung can make them, and paying top prices to get them.

In a potential boost to Samsung’s prospects, Apple has reportedly held early-stage talks about getting Samsung to make the main processors for its devices in the United States, which it currently relies on TSMC to do. 

Will the rally last?

The supply of memory chips is currently tight, and Samsung has itself warned that the crunch will get worse in 2027, which means chip prices are likely to keep rising. Analysts polled by Bloomberg expect the stock to climb another 30 per cent over the next year.

However, not everything is going Samsung’s way. While the chip business is booming, its smartphone and screen divisions are struggling with rising costs for raw materials and components.