Samsung's Chip Profit Drives Another Record Quarter — Update

By Kwanwoo Jun

Samsung Electronics reported its fourth consecutive quarter of record earnings as its core semiconductor business continued to ride the AI-driven demand wave, though the results fell short of lofty expectations amid growing calls for higher shareholder returns.

The South Korean company's quarterly operating profit topped 100 trillion won, equivalent to $74.52 billion, making it the first major global technology company to cross that threshold. It also reiterated that tight memory supply is expected to continue for the next few years, keeping chip prices elevated.

"The tight supply-demand balance is expected to persist through 2028," Jaejune Kim, executive vice president of Samsung's memory business, said during Thursday's conference call.

Next year's supply is already fully booked, according to Samsung. Customers are rushing to secure supplies through multiyear contracts, while some existing clients are eager to renew their long-term agreements, it said.

The upbeat outlook from the world's largest memory-chip maker--a major supplier of high-bandwidth memory to Nvidia and other AI infrastructure players--suggests that the artificial-intelligence boom has room to run, potentially easing concerns about the sustainability of AI spending.

For the three months ended September, net profit jumped more than six times from a year earlier to 75.136 trillion won. Analysts had expected 86.13 trillion won, according to a FactSet consensus estimate.

Revenue more than doubled, hitting a record 195.253 trillion won, while operating profit increased nearly ninefold to 107.441 trillion won. Both metrics, largely in line with the company's preliminary estimates, have surged to all-time highs since the fourth quarter of 2025.

Samsung's chip-making division was the main growth driver, posting record operating profit of about 106.5 trillion won. That accounted for most of the company's overall operating income for the quarter.

Higher chip prices boosted Samsung's semiconductor business but squeezed margins in other electronics divisions by raising component costs. The company said its smartphone and home-appliance businesses posted modest operating losses.

Samsung expects strong earnings driven by AI-chip demand to continue through next year, with sales of its higher-end HBM4 products expected to rise significantly. It expects multiyear supply contracts to cover 60% to 70% of its projected production capacity by 2030.

With demand outstripping supply, Samsung is directing most of its investment toward the chip business. The company expects capital expenditure to reach 84.4 trillion won in 2026, including 76.8 trillion won allocated to the semiconductor division.

The extended run of record earnings, however, failed to lift Samsung shares amid high market expectations and lingering concerns about AI infrastructure spending. A lack of details on shareholder returns also weighed on the stock. Shares fell more than 5% in early afternoon trading, trimming the year-to-date gain to about 90%.

As profit surges, investors are turning their attention to Samsung's shareholder returns. Samsung reaffirmed Thursday that it will return 90 trillion won to 110 trillion won to shareholders for 2026, with details to be finalized in early 2027. So far, it has already planned or completed a 35 trillion won return, including 30 trillion won in third-quarter dividends.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com

(END) Dow Jones Newswires

October 29, 2026 01:11 ET (05:11 GMT)