Samsung Sees Record Profit on AI Chip Demand
The memory division is benefiting from tight supply in DRAM, NAND, and HBM for AI servers. At the same time, the mobile division remains under pressure, and the stock could stay volatile.
Key Takeaways
- Samsung expects operating profit of 107.4 trillion won in the third quarter, topping 100 trillion won for the first time ever for a tech company.
- The record profit is mainly being driven by strong demand for AI-related memory chips, while HBM shipments rose nearly 50%.
- Reuters says the mobile unit posted more than $1 billion in losses, while analysts warn that price volatility could continue.
Samsung Electronics expects operating profit of 107.4 trillion won in the third quarter, or about $80 billion (€71.5 billion). That would make it the first tech company ever to top 100 trillion won in a single quarter. The jump shows how strong demand for AI-related chips is, while analysts also warn that the stock could stay volatile.
AI Chip Demand Drives Profit
The main driver behind the record profit is the memory chip division. These chips store data in smartphones and AI servers, and AI data centers are buying them faster than manufacturers can supply them. That has pushed prices higher and helped Samsung benefit from a tight market.
According to estimates, the memory business earned about 110 trillion won. HBM shipments, the stacked chips that power AI processors, also rose by nearly 50% from the second quarter. The global shortage of DRAM and NAND also appears likely to last longer, suggesting that pressure in the chip market is not going away anytime soon.
Mobile Unit Feels the Costs
Not every division is benefiting equally. Reuters says the mobile unit likely posted more than $1 billion (€0.9 billion) in losses, because higher chip costs are squeezing margins there instead. Samsung will release results by business division on October 29.
Investors Watch the Stock
For shareholders, the focus now is not just on profit, but also on the stock’s valuation. Goldman Sachs keeps a price target of 490,000 won, about 87% above Thursday’s closing price, and had earlier repeated a buy rating. Other analysts are even higher, with Korea Investment & Securities at 650,000 won. BNK Investment & Securities is the exception, with a target of 270,000 won and a hold rating.
Trading in the stock got extra attention this week because foreign investors and institutions were net sellers. At the same time, analysts point out that the chip cycle is not over yet, although they do expect profit growth in the fourth quarter to be lower than in the third quarter.
