AI memory demand lifts Samsung Q3 operating profit to record 107 trillion won

Of all the signals Samsung provided, its forecast that the chip shortage would intensify in the coming year carries the most weight for the market. That projection implies memory producers will retain their ability to set prices, and it reinforces the positive tone struck by SK Hynix the day before. It also aligns with the ambitious capital expenditure commitments from American hyperscale data-center operators, including Microsoft, which underpin chip demand. The shortfall on net profit could dampen the response, but since the operating numbers had already been flagged and the forward view takes precedence, traders are likely to look past that. Softness in the mobile and display units shows how heavily Samsung's profitability now leans on one cycle, making its shares sensitive to any shift in sentiment around AI expenditure.

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One day earlier:

• SK Hynix's Q3 operating profit hit 83tn won, ahead of forecasts, with a 100tn won shareholder payout plan announced

--- Samsung has turned into an AI memory company with a phone unit attached, a mix that is very profitable for now.

Highlights:

• Quarterly operating profit climbed close to ninefold, reaching roughly 107 trillion won (about $80 billion), matching Samsung’s earlier projection.
• Revenue landed at approximately 195 trillion won, as expected, but net profit of near 75 trillion won fell short of the roughly 84 trillion won analyst estimate.
• The semiconductor unit contributed 106.5 trillion won to operating profit, while the mobile arm lost about 600 billion won and the display business earned around 1.1 trillion won.
• Samsung sees memory demand continuing to expand in the fourth quarter, with the chip shortage projected to worsen next year.
• Foundry revenue increased substantially in the quarter and is seen rising by a double-digit rate in Q4.
• The company declared a Q3 dividend totalling about 30 trillion won, equivalent to 4,601 won per share.

Samsung Electronics achieved a record operating profit in the third quarter, almost nine times the year-ago level, thanks to surging demand for AI-oriented chips that pushed its semiconductor operations to record earnings, according to Reuters.

Operating profit came to about 107 trillion won, or $80 billion, aligning with the firm's earlier estimate and up from roughly 12 trillion won in the same period last year. Revenue, at about 195 trillion won, also matched expectations. Samsung noted it was the first tech company worldwide to exceed 100 trillion won in quarterly operating profit.

Net profit disappointed, coming in at about 75 trillion won versus an LSEG SmartEstimate of around 84 trillion won, a miss of more than 8 trillion won.

The semiconductor division delivered operating profit of 106.5 trillion won, which made up nearly the entirety of the group's profit. Samsung stated that memory chip demand will remain on an upward trajectory in Q4 and that the supply deficit for chips will intensify next year. The foundry arm, which manufactures chips on behalf of clients, experienced a strong revenue upswing during the quarter and is projected to expand by a double-digit percentage in the fourth quarter.

Other segments told a starkly different story. The mobile unit swung to an operating loss of close to 600 billion won, whereas the display division booked about 1.1 trillion won in profit. Samsung anticipates weak demand in its display operation to persist until 2027.

Additionally, Samsung declared a dividend for the third quarter worth about 30 trillion won in total, or 4,601 won per share.

The figures were released a day after domestic rival SK Hynix posted robust results and a positive forecast, calming worries that AI-fueled chip earnings might stall and pushing up the share prices of both firms. Still, investors remain wary about the durability of the current AI investment pace.

Given Samsung's prediction of a tighter chip market in the year ahead, the main concern for investors is whether demand from hyperscalers remains solid as key clients outline their own capital expenditure intentions.