Samsung projects record $80 billion Q3 operating profit on AI chip demand

Samsung Electronics has projected a quarterly operating profit of 107.4 trillion won ($80.17 billion) for the July-September period, which would be the highest quarterly operating profit ever recorded by a technology company.

The company made the projection on Thursday, with the forecast representing a nearly nine-fold increase in operating profit from a year earlier, according to Reuters.

The increase is driven largely by strong memory chip sales as booming demand for artificial intelligence infrastructure outpaces chip supply and pushes prices higher.

The projection is slightly above the 106.1 trillion won average estimate from LSEG SmartEstimate and would mark Samsung’s fourth consecutive quarter of record operating profit.

AI demand drives memory chip earnings

Samsung, the world’s largest memory chipmaker, said third-quarter revenue is expected to rise 127% year-on-year to 195 trillion won.

• Memory chips are expected to account for most of the earnings improvement, as tight supplies of conventional DRAM and NAND chips coincide with growing demand for high-bandwidth memory (HBM), which is essential for processing large amounts of data for AI applications.
• Samsung and rival Micron expect the global memory supply imbalance to persist into 2028, although increasing competition from Chinese chipmakers and a potential slowdown in AI spending could pose risks to the longer-term earnings outlook.
• Market research firm TrendForce expects conventional DRAM contract prices to rise by 10% to 15% in the fourth quarter from the preceding quarter, significantly slower than the roughly 60% increase recorded in the second quarter.

The moderation in memory prices is being closely watched after a more than year-long rally propelled profit margins to record highs for Samsung, SK Hynix and Micron.

Samsung faces pressure beyond memory chips

Despite the earnings forecast, Samsung shares were little changed in early trading, falling 0.2% compared with a 0.5% decline in South Korea’s benchmark KOSPI index.

• The company’s shares have fallen more than 25% from their record high in June amid concerns about the durability of the AI boom.
• Analysts expect Samsung’s fourth-quarter profit to increase by 8.2% from the third quarter, representing a slowdown from the 20% sequential growth expected in the third quarter as chip price growth moderates.
• Analysts have also recently trimmed their forecasts following the sharp appreciation of the South Korean won, which reduces the value of Samsung’s dollar-denominated overseas sales when converted into local currency.

Samsung is expected to release its detailed third-quarter results, including a breakdown of earnings by business division, on October 29.

Investors will also be watching for details of the company’s shareholder return policy during its earnings call later this month.

What you should know

Samsung’s latest earnings outlook comes as the global semiconductor industry continues to adjust to the surge in demand for chips used in artificial intelligence systems.

Nairametrics earlier reported that global memory chip shortages driven by AI demand could push smartphone prices higher, as semiconductor manufacturers redirect production capacity towards high-bandwidth memory (HBM) used in AI accelerators.

Earlier, Nairametrics also reported that Samsung secured a $16.5 billion agreement to produce AI semiconductors for Tesla, in a deal that strengthens its foundry business as the company seeks to compete more closely with Taiwan Semiconductor Manufacturing Company (TSMC) in advanced chip manufacturing.