AI chip demand powers Samsung to record profit, but investors see trouble ahead

Samsung Electronics is expecting a record quarterly operating profit of 107.4 trillion won ($80.2 billion) as the global artificial intelligence boom drives demand for memory chips. If confirmed, it would be the first time a technology company has reported quarterly operating profit above 100 trillion won.

The South Korean technology giant expects third-quarter revenue to rise 127 per cent year on year to 195 trillion won. Its profit estimate is also slightly ahead of the 106.1 trillion won forecast from LSEG SmartEstimate. The results highlight how rapidly AI infrastructure spending is reshaping the semiconductor industry. Demand for memory used in AI systems has surged, pushing chip prices higher and creating a supply shortage.

AI chips drive Samsung’s record profit

Memory chips are expected to account for most of Samsung’s earnings improvement. Demand is rising for conventional DRAM and NAND chips, while high-bandwidth memory (HBM) has become increasingly important for AI systems processing huge amounts of data. Analyst Douglas Kim estimates Samsung's HBM bit shipments grew by nearly 50 per cent from the previous quarter as the company works to narrow its gap with SK Hynix in the HBM market.

Samsung's forecast would mark its fourth consecutive quarter of record operating profit. However, the company is not benefiting equally across all businesses.

Smartphones and foundry business face pressure

Higher memory component prices are creating problems for Samsung's smartphone and consumer electronics businesses. Analysts estimate that Samsung's mobile division posted a larger-than-expected loss of more than $1 billion in the third quarter. Its contract chipmaking, or foundry, business is also expected to remain loss-making, partly because of high fixed costs and low utilisation rates.

Samsung is trying to close the gap with TSMC, the world's leading advanced contract chipmaker. Analysts expect utilisation at Samsung's foundry business to improve over coming quarters as demand for advanced manufacturing increases.

Can Samsung’s AI boom last?

The record forecast comes with a major question for investors: how sustainable is the AI-driven chip boom? Samsung and Micron expect the global memory supply imbalance to continue into 2028. But analysts are already expecting slower profit growth in the fourth quarter.

TrendForce forecasts conventional DRAM contract prices will rise 10 to 15 per cent in Q4, compared with a surge of around 60 per cent in the second quarter.

Samsung shares have also fallen more than 25 per cent from their June record high amid concerns about the durability of AI spending. The company will release its detailed third-quarter results and business-by-business earnings breakdown on October 29.