Samsung profit rises on chip windfall

Samsung Electronics Co reported a nearly nine-fold rise in quarterly operating profit, although that was still shy of sky-high expectations elevated by relentless spending on artificial intelligence (AI) infrastructure.

The world’s largest memorychip maker yesterday posted a record preliminary operating profit of 107.4 trillion won (US$80.1 billion) for the quarter through last month, but even those record results still fell short of the average analyst forecast.

Revenue was 195 trillion won, also lower than expectations.

The Samsung logo is pictured at the Samsung Electronics Seocho building in Seoul yesterday.

Photo: AFP

“Samsung has delivered a record profit and still fallen short of expectations, which tells you just how demanding the AI trade has become,” eToro Group Ltd lead Asia Pacific analyst Josh Gilbert said.

Technology providers are rushing to secure supplies of memory needed to power AI services. High-bandwidth memory (HBM) — the critical chips used alongside Nvidia Corp and other AI accelerators — is drawing massive spending, with flash memory and low-power chips also in demand.

The record numbers and high expectations underscore how sharply the economics of the AI boom have swung in favor of Samsung, SK Hynix Inc and Micron Technology Inc.

The boom has transformed Samsung’s semiconductor business, which only a few years ago was grappling with losses after a punishing downturn in demand.

Now, the AI infrastructure buildout is absorbing vast amounts of advanced DRAM, while Samsung is gaining ground on SK Hynix in HBM.

The strength of the cycle is also showing up in South Korea’s trade data, with last month’s semiconductor export more than tripling from a year earlier.

Analysts on average estimate Samsung’s chip division will post operating profit of 110 trillion won, while its electronics unit will report a loss.

The Suwon-based company is scheduled to release a full financial statement on Oct. 29.

However, market caution persists.

Samsung’s shares remain about 25 percent below their June peak even after the company reported record-breaking results in July.

Investors retain a measure of skepticism around soaring profits in a sector prone to boom-and-bust cycles.

Samsung and SK Hynix are now expanding production capacity while also increasingly backing companies in the AI sector in a bid to drive more demand for their products.

Highlighting market dynamics, Advanced Micro Devices Inc (AMD) chief executive officer Lisa Su (蘇姿丰) emphasized long-term strategic partnerships with Samsung and SK Hynix during a visit to Seoul this week.

Su said that AMD has begun shipping its next-generation Instinct MI455X and Helios systems featuring HBM4.

“Memory is so essential to overall computing; it has been a very tight supply environment,” Su told reporters on Wednesday, adding that AMD’s HBM partnerships with Samsung and SK Hynix will span multiple product generations.

“We’re encouraging our partners to build as fast as possible,” she said.