Samsung Electronics is projecting an operational profit of 107.4 trillion won ($80.17 billion) for the third quarter, marking a staggering 783% increase compared to the same period last year. This figure slightly exceeds analysts' expectations of 106.1 trillion won, according to Reuters.

The company’s revenue is estimated to be around 195 trillion won ($145.8 billion), reflecting a 127% year-on-year growth. Samsung is scheduled to release its final results on October 29.

If these projections hold true, it will be the first time Samsung achieves over 100 trillion won in operational profit within a single quarter, setting a record for tech companies.

AI Drives Memory Shortage

The semiconductor division played a pivotal role in this remarkable performance. The demand for memory surged significantly due to the construction of data centers for AI, which require substantial amounts of DRAM and high-performance HBM memory.

This chip shortage has enabled manufacturers to increase prices. Bernstein estimates that the average price of DRAM rose by approximately 20% in the third quarter compared to the previous quarter, with analysts predicting an additional increase of 10-15% by year-end.

Samsung, along with SK Hynix and Micron, has emerged as a key beneficiary of this cycle. Samsung is also working to narrow the gap with SK Hynix in the HBM market; analyst Douglas Kim noted that Samsung's HBM shipments surged nearly 50% quarter-on-quarter in the third quarter.

Market share dynamics of memory manufacturers for AI. Source: Reuters.

Smartphone and Chip Contract Manufacturing Dragging Down Performance

While the memory boom is beneficial, it is simultaneously creating challenges for other sectors of Samsung. The rising costs of components have negatively impacted the production of smartphones and consumer electronics.

Analysts estimate that the mobile division incurred losses exceeding $1 billion in the third quarter. Additionally, the contract chip manufacturing segment remains unprofitable due to high fixed costs and underutilized capacity.

Market Anticipates Slowdown

Despite the record results, Samsung's stock prices fell in response to the report. Investors are concerned about the sustainability of the current price increases for memory and the demand for AI infrastructure.

Analysts forecast that operational profit growth will decelerate to 8.2% quarter-on-quarter in the fourth quarter, compared to approximately 20% growth in the third quarter. TrendForce predicts that contract prices for standard DRAM will rise by 10-15% in the fourth quarter, significantly lower than the roughly 60% increase seen in the second quarter.

Nonetheless, both Samsung and Micron anticipate that the memory shortage will persist at least until 2028. The primary risks for the industry include intensified competition from Chinese manufacturers and a potential slowdown in spending on AI infrastructure.

Intel CEO Pat Gelsinger predicted in September that the memory chip shortage would only worsen.

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