Samsung Electronics is expected to report a nearly nine-fold jump in third-quarter operating profit to 106.1 trillion won ($79.1 billion), driven by AI demand, though chip margins may remain flat amid slowing price growth (Y94).
Samsung’s third-quarter profit surge reflects robust demand for AI infrastructure, but analysts warn that memory chip price increases are decelerating, raising questions about the sustainability of the AI spending boom. The world’s largest memory-chip maker is projected to post record operating profit for the fourth consecutive quarter, underscoring a prolonged shortage as AI adoption outpaces supply growth (Y94).
Samsung’s Q3 Profit Surge and Margin Outlook
Samsung’s third-quarter operating profit is expected to reach 106.1 trillion won ($79.1 billion), a nearly nine-fold increase from the same period last year, according to LSEG SmartEstimate. This follows a 7.7% downward revision in forecasts since August, despite a 14.3% strengthening of the South Korean won against the dollar (Y94). The company’s memory-chip operating profit margin is projected to hold steady at 76%, flat from the previous quarter, per SK Securities analyst Han Dong-hee (Y94).
The South Korean won appreciated 14.3% against the dollar during the third quarter, rebounding sharply from 17-year lows for its largest quarterly gain since early 1998 (Y94). Analysts note that exporters typically see reported earnings shrink when the won-dollar rate falls, but Samsung Electro-Mechanics has offset the currency drag by winning far more AI component orders from global technology giants (Sedaily).
Market Dynamics and Price Trends
The pace of memory chip price growth has slowed, with TrendForce forecasting a 10% to 15% rise in conventional DRAM contract prices for the fourth quarter, down from a second-quarter surge of roughly 60%. Although the market remains in a tight supply position, the pace of price growth is expected to decelerate,
said Avril Wu, TrendForce’s senior vice president for research (Y94). Long-term supply agreements now account for a growing share of chipmakers’ output, with ceiling-price mechanisms dampening rate increases (Y94).
Chipmakers expect the memory shortage, which began more than a year ago, to persist into next year and perhaps through 2028. However, the slowdown in price increases has raised concerns about the durability of the AI spending boom (Y94). Samsung’s third-quarter operating profit margin is expected to reach 76%, flat with the preceding quarter, estimates by SK Securities analyst Han Dong-hee show (Y94).
Competition and Global Supply Chains
Samsung Electro-Mechanics, one of South Korea’s leading exporters of artificial intelligence components, is expected by the industry to see third-quarter operating profit more than double from a year earlier, with a consensus forecast standing at 605 billion won ($431 million) according to FnGuide (Sedaily). KB Securities and iM Securities predict figures at 660.1 billion won and 650 billion won, respectively (Sedaily). The company signed a 1.0722 trillion won ($764 million) MLCC supply contract with a global technology company and plans to expand production capacity by up to 20% a year along with a new Philippine plant at its domestic plant in Busan (Sedaily).
With advancements in AI chip performance, package substrates are expanding in size and complexity, increasing the supply challenges for high-performance FC-BGAs and boosting market hopes for improved pricing and margins (Sedaily). We plan to respond actively to market demand centered on high-performance, high-reliability products and to strengthen our differentiated product competitiveness,
said a Samsung Electro-Mechanics official (Sedaily).
Currency Swings and Future Outlook
The strengthening won, which gained 14.3% against the dollar in the third quarter, is reducing the value of overseas earnings when repatriated (Y94). Analysts expect the memory shortage to persist into next year and perhaps through 2028, though chipmakers are cautious about further steep price increases that could hurt demand across a broad range of consumer electronics (Y94). Samsung is expected to boost sales of high-bandwidth memory (HBM) chips, with its HBM market share expected to rise to 34% this year from 20% last year, while SK Hynix’s share is forecast to fall to 46% from 60% (Y94).
Samsung’s third-quarter operating profit margin is expected to reach 76%, flat with the preceding quarter, estimates by SK Securities analyst Han Dong-hee show. The company is encountering increasing competition from Chinese competitors, who focus on lower-end products but are capitalizing on the memory shortage fueled by AI demand (Y94).