Samsung flags US$80 billion profit on AI boom, highest quarterly for any tech company

SEOUL (Oct 8): Samsung Electronics on Thursday projected its quarterly profit would top 100 trillion won, a world first for a technology company, estimating a nearly nine-fold jump in third-quarter earnings as booming demand for AI chips drove strong memory sales.

The world's largest memory chipmaker estimated an operating profit of 107.4 trillion won (US$80.17 billion) for the July-September period, slightly ahead of an LSEG SmartEstimate of 106.1 trillion won.

The forecast marks Samsung's fourth straight quarter of record operating profit, underscoring a deepening global memory chip shortage as AI infrastructure investment outpaces supply growth, which has driven chip prices up sharply.

Samsung and Micron expect the imbalance to persist into 2028, although Chinese competition and a potential slowdown in AI spending pose risks to the longer-term earnings outlook.

Samsung's shares moved sideways despite flagging another record profit, slipping 0.2% in early trade versus a 0.5% fall in the benchmark KOSPI. Its share price has slumped more than 25% from a record high in June amid concerns about the durability of the AI boom.

Analysts have also recently trimmed their forecasts due to the sharp appreciation of the South Korean currency, which reduces the value of dollar-denominated overseas sales when converted into local currency.

"The market's focus has shifted to whether the sharp earnings growth that started a year ago would be sustainable," market analyst Kim Seok-hwan at Mirae Asset Securities said.

Analysts expect profit in the fourth quarter to grow 8.2% from the previous quarter, slowing from 20% sequential quarterly growth in the third quarter, with chip price growth abating.

Market research firm TrendForce expects conventional DRAM contract prices to rise 10% to 15% in the fourth quarter from the preceding quarter, much slower than a second-quarter surge of roughly 60%.

The moderation in memory prices is being closely watched by investors after a more than year-long rally that propelled profit margins to record highs for the world's largest memory producers Samsung, SK Hynix and Micron.

Third-quarter revenue would likely rise 127% to 195 trillion won from a year earlier, Samsung said.

The company will release detailed results, including a breakdown of earnings by business division, on October 29.

Memory chips are expected to account for the bulk of the earnings improvement.

Prices have soared due to the tight supply of conventional DRAM and NAND chips, as well as growing demand for high-bandwidth memory (HBM), essential for processing vast amounts of data for AI applications.

Douglas Kim of Douglas Research Advisory estimated that Samsung's HBM bit shipments expanded by close to 50% quarter-over-quarter in the third quarter, with Samsung trying to narrow the gap with SK Hynix 000660.KS in the HBM market.

But the memory chip boom presents a challenge for Samsung's other businesses, particularly its smartphone and consumer electronics divisions, which face mounting pressure from higher component costs.

Samsung's mobile business posted a larger-than-expected loss of more than US$1 billion in the third quarter, analysts said.

Meanwhile, Samsung's contract chipmaking, or foundry, business is expected to remain loss-making because of the burden of fixed costs and still-low utilisation rates, analysts said.

However, utilisation is expected to improve over the next several quarters, supported by stronger demand for advanced manufacturing processes. Samsung has been seeking to narrow the gap with industry leader TSMC in advanced contract chip manufacturing.

Investors said they would also be closely watching for details of Samsung's shareholder return policy during its earnings call later this month.

Uploaded by Liza Shireen Koshy

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