Samsung Electronics expects a 160% fourth-quarter profit surge as AI demand drives memory chip prices to record highs.
The South Korean tech giant, which has long been one of the world's largest memory chipmakers, projects operating profit of 16.9 trillion won ($11.7 billion) for October through December, according to LSEG SmartEstimate from 31 analysts. This marks Samsung's strongest quarterly performance since 2018 and compares with 6.49 trillion won a year earlier.
Some analysts have raised estimates beyond 20 trillion won as traditional chip prices exceed expectations. Samsung releases preliminary revenue and operating profit figures on Thursday.
Memory chip prices have skyrocketed amid a severe shortage driven by AI demand. DDR5 DRAM chip prices jumped 314% in the fourth quarter year-over-year, according to market researcher TrendForce.
Conventional DRAM contract prices will rise 55% to 60% in the current quarter, TrendForce projects. "Samsung stands to gain relatively more from the current price upcycle," said TrendForce analyst Avril Wu, noting the company's concentration in conventional memory production.
The profit surge represents a dramatic turnaround from just over a year ago, when Samsung lagged rival SK Hynix in supplying high-end chips to Nvidia. Samsung shares jumped 125% last year, their biggest annual gain in 26 years.
Co-CEO and chip chief Jun Young-hyun said customers have praised the competitiveness of Samsung's next-generation HBM4 chips, with some stating "Samsung is back," according to a New Year address reviewed by Reuters. The company is making progress supplying chips to Nvidia, potentially gaining share against SK Hynix and Micron.
Nvidia CEO Jensen Huang confirmed the company's next generation of chips is in full production. The Vera Rubin platform, which will incorporate HBM4 chips, arrives later this year.
Some analysts project Samsung's operating profit could more than double this year to over 200 trillion won as chip price gains offset slowing mobile business profits. However, rising chip prices squeeze margins in Samsung's smartphone division, its second-largest revenue source.
"Samsung is trying to minimise the impact, which looks inevitable," said co-CEO TM Roh, who oversees mobile, TV and home appliance businesses. He acknowledged that "no company is immune" to the unprecedented situation.
Micron Technology CEO Sanjay Mehrotra expects memory markets to remain tight past 2026, with the company meeting only half to two-thirds of demand from key customers. Micron forecast second-quarter adjusted profit at nearly double Wall Street estimates in December.
Some analysts express caution about Samsung's valuations, citing potential demand slowdowns for PCs and smartphones. Lee Min-hee of BNK Investment & Securities warned of "risks of a demand slowdown" for AI data centers increasingly relying on debt financing.
The semiconductor industry's shift toward AI-related chips has reduced traditional memory production while demand surges for both conventional and advanced chips to train and run AI models. This supply-demand imbalance continues to drive prices higher across the memory market.
