Samsung's Operating Profit Jumps Nearly Ninefold To Record $80.1 Billion, Misses Estimates Amid AI Chip Boom

Samsung Electronics announced a staggering record operating profit of $80.1 billion, a nearly ninefold increase, for the quarter ending September. This profit surge was driven by unprecedented demand for memory chips crucial to artificial intelligence (AI) infrastructure. However, the figures fell short of Wall Street's estimates.

Bloomberg reported a preliminary operating profit of 107.4 trillion won ($80.1 billion) and revenue of 195 trillion won, both below market forecasts. As a result, Samsung's shares remained relatively flat during early trading in Seoul on Thursday.

The meteoric rise of AI infrastructure has significantly boosted demand for advanced memory products, especially high-bandwidth memory (HBM) used in conjunction with Nvidia processors and other AI accelerators. The demand for flash memory and low-power chips has also intensified, positively impacting major manufacturers like Samsung, SK Hynix, and Micron Technology.

Counterpoint Research recently revised its forecast for third-quarter dynamic random-access memory (DRAM) prices, projecting a sequential rise of 10% to 20%, up from its initial estimate of 5% to 10%. This revision was primarily due to customers advancing their orders.

While Samsung's semiconductor operations have experienced a remarkable turnaround following a previous downturn that led to significant losses, investor caution persists despite the semiconductor boom. Analysts anticipate Samsung's chip division to report an operating profit of 110 trillion won, while its electronics business is expected to incur a loss. The company is scheduled to release its detailed financial results on October 29.

Despite announcing record earnings in July, Samsung shares have remained about 25% below their June peak, reflecting investor skepticism about the historically cyclical nature of the semiconductor industry. Meanwhile, Samsung and SK Hynix are scaling up manufacturing capacity and ramping up investments in AI companies to cater to the burgeoning demand.