Samsung Set to Post 18-Fold Profit Surge as AI Memory Demand Roars

Samsung Electronics is likely to report an extraordinary jump in profitability when it issues preliminary second-quarter guidance on Tuesday, according to Reuters.

An LSEG SmartEstimate compiled from 30 analysts, weighted toward those with the strongest forecasting records, points to an operating profit of roughly 86 trillion won, about $56.35 billion, for the April-to-June period.

That would represent nearly an 18-fold increase from the 4.7 trillion won reported a year ago, surpassing Q1’s already massive eightfold surge and marking the company’s third straight quarter of record operating profit, underscoring the AI memory boom fueling its earnings.

Beyond HBM: A Broader Memory Squeeze

While high-bandwidth memory chips for AI accelerators have attracted most of the attention, Reuters reported that conventional DRAM and NAND flash are also seeing strong price increases. 

This surge is attributed to the AI workloads that are expanding from model training to inference and more advanced agentic AI applications that require greater memory and storage capacity. 

Reports note that average selling prices for DRAM and NAND rose 44% and 53% quarter on quarter during the second quarter, fueling a broader rally across the memory sector and causing consumer hardware price hikes. 

Samsung, SK Hynix, and Micron have gained 158%, 273%, and 242% this year, respectively, pushing all three above trillion-dollar valuations, with SK Hynix becoming South Korea’s most valuable company and Samsung close behind. 

Samsung supplies memory to major customers including Nvidia, Google, and Apple, and strengthened its position in April by signing multi-year binding supply contracts, although it did not disclose the customers or financial terms.

Bonus Payouts Could Cloud the Headline Number

Despite the favorable market conditions, analysts say Samsung’s reported earnings could still miss consensus estimates if it records a larger-than-expected provision for employee bonuses this quarter. 

The company avoided a large-scale strike in late May by reaching a wage agreement that allocates 10.5% of its semiconductor division’s operating profit to special employee bonuses. 

Some analysts estimate those bonus provisions could exceed 40 trillion won, making the timing of their accounting recognition a key factor in the quarter’s final results. Samsung is scheduled to release its full earnings report later this month.

Separately, Samsung’s chip and foundry business reportedly returned to profit in June for the first time since 2023, driven by stronger HBM4 base die production and improved manufacturing yields. 

This turnaround was cemented by new production contracts for Tesla’s AI6 chips and Groq processors, with the latter drawing intense focus after Nvidia’s $20 billion licensing deal.

Analysts Flag Risks to the AI Memory Boom

Looking ahead, JPMorgan estimates AI memory will account for 52% of cloud service providers’ capital expenditure this year and more than 70% next year, raising questions about the sustainability of that spending.

Samsung and SK Hynix have pledged a combined 3,200 trillion won (about $2.07 trillion) to expand chip manufacturing capacity across South Korea, with Samsung’s investment extending through 2040.

Analysts expect the upcycle to continue, forecasting DRAM prices to rise another 24% and NAND 25% in the third quarter. 

However, rising memory costs are affecting Samsung’s mobile division by squeezing margins despite recent handset price increases, prompting expectations of further hikes later this year.

The trend also reflects the global scramble for advanced chip capacity, speeding up domestic semiconductor production in markets such as China as the AI hardware race intensifies.

For Samsung, the AI memory boom continues to present significant opportunities despite growing cost pressures elsewhere in its business. 

Source: Samsung likely to post 18-fold jump in profit on surging AI demand for memory