Samsung flags $80 billion profit on AI boom, highest quarterly for any tech company

Samsung Electronics unveiled a projected quarterly profit exceeding 100 trillion won, setting a new record for a technology company. The third-quarter earnings surge is driven by skyrocketing demand for advanced AI chips, which has fueled a surge in memory sales. Estimating an operating profit of 107.4 trillion won ($80.17 billion) for the July-September period, Samsung's forecast exceeds expectations by a narrow margin.

This marks the fourth consecutive quarter of record profits for the company, highlighting a growing global memory chip shortage exacerbated by the rapid expansion of AI infrastructure investments. Analysts caution that the stronger-than-expected earnings could be short-lived, as concerns arise over the sustainability of the AI boom and the impact of the South Korean won's sharp appreciation, which erodes the value of overseas sales when converted back to local currency.

Despite the profit projection, Samsung's shares declined slightly in early trading, slipping 0.2% compared to a 0.5% drop in the broader KOSPI index. The share price has fallen over 25% since reaching a record high in June amid skepticism about the durability of the AI-driven profit growth. Analysts project a 8.2% increase in fourth-quarter earnings compared to the previous quarter, a significant slowdown from the 20% sequential growth recorded in the third quarter, as chip prices begin to stabilize after a more than year-long rally.

Samsung is set to disclose the full financial results, including a breakdown of earnings by business segment, on October 29. In the mobile segment, Samsung anticipates a larger-than-anticipated loss of over $1 billion in the third quarter, while its foundry business, responsible for contract chip manufacturing, is expected to remain loss-making due to fixed costs and low utilization rates.

However, analysts anticipate improvements in utilization as demand for advanced manufacturing processes rises. Investors will scrutinize the company's shareholder return policy during its upcoming earnings call.