Samsung profits surge ninefold as AI memory demand outpaces supply

Samsung Electronics announced a record-breaking surge in its quarterly operating profit, which rose approximately ninefold. The increase was fueled by growing demand for memory chips essential to artificial intelligence infrastructure. Despite the historic performance, the company’s figures fell short of elevated analyst expectations.

Financial Results Miss Forecasts

The South Korean electronics giant posted preliminary operating earnings of 107.4 trillion won ($80.1 billion) for the quarter ending in September. Revenue reached 195 trillion won. Both metrics trailed the average projections from market analysts. Shares traded flat during early morning sessions in Seoul on Thursday.

AI Boom Drives Memory Demand

The artificial intelligence expansion has intensified competition among technology firms for memory supplies, particularly high-bandwidth memory (HBM). HBM serves as a critical component in AI systems alongside Nvidia processors and other accelerators. Demand extends beyond HBM to include flash memory and low-power consumption chips. These trends highlight a sharp shift in the AI boom’s economics favoring Samsung, SK Hynix, and Micron Technology.

Sanjeev Rana, head of semiconductor research for North Asia at CLSA Securities Korea, noted that the memory market retains strong momentum with demand continuing to exceed supply. He forecasted significant price increases for HBM throughout 2027.

SpaceX Seeks Funding For Chips

The Financial Times revealed that SpaceX plans to raise $40 billion, led by asset manager Apollo Global Management, to purchase AI chips from Nvidia. This development underscores the broader industry scramble for advanced computing hardware.

Counterpoint Research revised its third-quarter DRAM price outlook upward. The firm now predicts a sequential rise of 10% to 20%, compared to the previous estimate of 5% to 10%. The adjustment reflects customers accelerating their order placements.

Semiconductor Division Rebound

The AI boom has reshaped Samsung’s semiconductor business following years of losses. Advanced DRAM chip demand has grown, narrowing the gap between Samsung and SK Hynix in the HBM market. This recovery impacted South Korea’s export data, with semiconductor shipments more than tripling year-on-year in September.

Analysts estimate the chip division will generate an operating profit of 110 trillion won, while the electronics unit is expected to report a loss. The Suwon-based company will release full financial statements on October 29.

Investor Caution Persists

Samsung shares remain roughly 25% below their June peak, despite the record results announced in July. Investors exhibit caution regarding sustained profit growth in a sector known for cyclical highs and lows.