Samsung Electronics expects its third-quarter operating profit to reach a record 107.4 trillion won, or about $80.17 billion, as strong demand for AI chips drives higher memory sales.
The forecast represents a nearly nine-fold increase in operating profit from a year earlier and would mark Samsung’s fourth consecutive quarter of record operating profit. The estimate is also slightly above LSEG SmartEstimate’s 106.1 trillion won forecast.
The results highlight the growing shortage of memory chips as investment in AI infrastructure continues to outpace supply growth, pushing chip prices higher.
AI Demand Drives Samsung’s Memory Business
Memory chips are expected to account for most of Samsung’s earnings improvement. Demand has risen for conventional DRAM and NAND chips as well as high-bandwidth memory (HBM), which is increasingly important for AI applications.
Samsung and Micron expect the supply imbalance to continue through 2028, although stronger competition from Chinese manufacturers and a potential slowdown in AI spending could affect longer-term growth.
Samsung’s HBM bit shipments are estimated to have increased by nearly 50% quarter-on-quarter during the third quarter as the company works to close its gap with SK Hynix in the HBM market.
TrendForce expects conventional DRAM contract prices to increase 10% to 15% in the fourth quarter from the previous quarter. That would represent a significant slowdown from the roughly 60% increase recorded in the second quarter.
Samsung Shares Remain Under Pressure
Despite the record profit forecast, Samsung shares were largely unchanged, falling 0.2% in early trading, while the benchmark KOSPI fell 0.5%.
The stock has dropped more than 25% from its record high in June as investors question how long the AI-driven memory boom can continue.
Analysts have also reduced some earnings forecasts following the sharp appreciation of the South Korean won, which lowers the value of overseas sales denominated in US dollars when converted into local currency.
Samsung’s third-quarter revenue is expected to rise 127% year-on-year to around 195 trillion won.
The company will release detailed third-quarter results and business division earnings on October 29.
Mobile and Foundry Businesses Face Pressure
The memory boom is also creating challenges for Samsung’s smartphone and consumer electronics businesses because higher chip prices are increasing component costs.
Analysts estimate that Samsung’s mobile business posted a loss of more than $1 billion in the third quarter, worse than expected.
Meanwhile, its contract chipmaking business is expected to remain loss-making because of high fixed costs and low utilisation rates. Utilisation is expected to improve over the coming quarters as demand for advanced manufacturing processes increases.
Samsung is also working to narrow its gap with TSMC in advanced contract chip manufacturing.
Investors will be watching Samsung’s earnings call later this month for further details on its memory outlook, foundry business and shareholder return plans. Profit growth is expected to slow in the fourth quarter, with analysts forecasting an 8.2% sequential increase compared with an estimated 20% rise in the third quarter.
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The memory chip boom presents a challenge for Samsung’s other businesses, particularly its smartphone and consumer electronics divisions. Photo: Reuters file
Source: KT
