Samsung's AI Boom: Profit Soars Ninefold Amidst Chip Shortage

Samsung Electronics is poised to announce a nearly ninefold increase in its third-quarter operating profit, driven primarily by escalating demand for artificial intelligence technologies. This projection comes despite a recent moderation in memory chip price gains and a strengthening South Korean won, which can impact overseas earnings.

Analysts have collectively revised their forecasts downward by approximately 7.7% since late August. Nevertheless, the company's expected operating profit of 106.1 trillion won for the July-September quarter signifies its fourth consecutive quarter of record profits. This sustained performance underscores a prolonged shortage in memory chips as AI infrastructure development outpaces supply growth.

The chip shortage, which began over a year ago, is anticipated by industry leaders to continue into next year and potentially through 2028. However, the slower pace of price increases in the third quarter has raised questions about whether chip margins have reached their zenith and the long-term durability of the current AI spending surge.

Samsung's shares have experienced a notable decline from their June peak, yet they remain more than double their value at the start of the year. The company is actively boosting its sales of high-bandwidth memory (HBM) chips, crucial for AI data centers, aiming to close the gap with market leader SK Hynix. Following initial delays in qualifying products for Nvidia, Samsung has made progress by expanding shipments of its latest HBM4 chips, projected to increase its HBM market share.