Samsung’s Q3 profit seen jumping nine-fold

Samsung Electronics is anticipated to announce a near nine-fold increase in third-quarter operating profit, fueled by strong demand for artificial intelligence (AI) technology, according to wire material from Seoul. Despite analysts lowering their forecasts by nearly 8% since the end of August, Samsung is projected to generate operating profit of ₩106.1 trillion (US$79.1 billion) for the July-September quarter.

This projection marks a stark contrast to the ₩12.17 trillion earned in the same quarter last year, highlighting a persistent memory shortage driven by soaring demand for AI infrastructure. Chipmakers project this shortage will continue until 2028, though price increases have slowed in Q3, raising concerns about the sustainability of the AI spending surge.

Samsung will unveil preliminary Q3 results on Thursday, with comprehensive data released in late October. The moderation in memory prices is closely monitored by investors after a year-long rally driven by AI demand. The cost burden from higher chip prices has been passed onto smartphone and consumer electronics manufacturers, dampening demand.

Long-term supply deals between chipmakers and customers have limited price gains in exchange for assured supply. TrendForce predicts conventional DRAM contract prices will rise 10% to 15% in Q4, slower than the 60% surge in Q2. Suppliers are cautious about excessive price hikes that could dampen demand across consumer electronics.

In July, Samsung pledged to secure long-term contracts covering approximately two-thirds of its memory output, joining other firms to mitigate the industry's boom-and-bust cycles. Competitors like US rival Micron anticipate a tighter market in 2027 and 2028, with a potential drop in gross margins to 86.3% in the current quarter due to employee compensation costs.

Samsung's memory-chip operating profit margin is forecast to reach 76% in Q3, flat with Q2, according to SK Securities analyst Han Dong-hee. The company also faces intensified competition from Chinese rivals, who are capitalizing on the AI-driven memory shortage, particularly in lower-end products. The Korean won's strengthening by 14.3% against the dollar in Q3, breaking a 17-year low, reduces overseas earnings when repatriated, impacting Samsung's share price, which has fallen about 25% from a June record but remains more than double its level at the beginning of the year.