The memory market is red-hot, with Samsung Electronics' profits expected to reach a historic high amid the AI wave. On January 8th local time, Samsung Electronics released its earnings guidance for the fourth quarter of 2025, with the world's largest memory chip manufacturer anticipated to deliver results far exceeding market expectations. According to preliminary data released by Samsung, the company's operating profit for the December quarter is projected to reach 20 trillion won (approximately $138 billion). This figure not only represents a sharp year-on-year surge but also shatters the previous record of 17.6 trillion won set in the third quarter of 2018. In contrast, analysts' prior average forecast was only 17.8 trillion won. For revenue, sales are expected to hit a record high of 93 trillion won, a 23% increase year-on-year.

Operating Profit: Projected to be a substantial 20 trillion won, tripling year-on-year, representing a 208% year-on-year increase and a sharp 64% quarter-on-quarter surge.

Sales: Compared to 75.79 trillion won in Q4 2024, this marks a significant year-on-year jump of approximately 23%; compared to the previous quarter's 86.06 trillion won, it represents a quarter-on-quarter growth of about 8%.

The logic behind the data is crystal clear: this isn't a story of broad-based demand recovery; it's a story of the supply side being forcibly squeezed by AI. To meet the insatiable demand from AI giants like NVIDIA for high-bandwidth memory (HBM) and enterprise-grade SSDs, memory manufacturers like Samsung are aggressively shifting production lines from standard consumer-grade chips to higher-margin, advanced chips. This structural shift in capacity is directly causing severe shortages of standard memory chips used in laptops and servers.

DRAM (Dynamic Random-Access Memory): According to analysis by Sanjeev Rana, Head of Korea Research at CLSA, the average selling price (ASP) for DRAM jumped more than 30% quarter-on-quarter in Q4.

NAND Flash: Prices increased by approximately 20% quarter-on-quarter.

The year-on-year figures are even more staggering: Data from market tracker TrendForce indicates that contract prices for a certain category of DRAM chips skyrocketed by 313% year-on-year in the fourth quarter.

For the market, the discrepancy in expectations lies here: while the market had anticipated price increases, it underestimated the willingness of hyperscalers to pay premiums to secure DRAM resources and underestimated the severity of this supply crisis. Samsung's stock price has already doubled over the past six months and continues to soar this month, reflecting strong bullish sentiment towards the memory cycle.

Wall Street Bets on "Runaway" Price Increases for Memory Chips Currently, Wall Street continues to bet on "runaway" price increases for memory chips. According to a Wall Street Insights article, the latest report from Citi shows analysts believe the market is entering an extremely intense seller's market. Citi warns of a "severe supply shortage" of memory chips globally in 2026 and offers an aggressive forecast:

Runaway Prices: Server DRAM ASP is projected to surge 144% year-on-year in 2026 (up from a previous forecast of 91%); enterprise SSD prices are expected to rise 87%.

Earnings Expectations Revised Upwards: Based on this, Citi projects Samsung Electronics' operating profit will skyrocket to 155 trillion won in 2026, a massive 253% year-on-year increase.

Analysts at CLSA also point out that hyperscalers are willing to pay premiums to secure supply, and price strength is expected to persist throughout 2026, potentially even extending into the first half of 2027.

Catching Up in HBM: From Lagging Behind to Counterattacking In this AI boom, Samsung was initially behind competitors SK Hynix and Micron Technology in the HBM arena. However, recent signals indicate Samsung is closing the gap. It is reported that Samsung delivered samples of its cutting-edge HBM4 to NVIDIA for qualification testing last year. This has sparked market optimism that Samsung could begin mass production in the first half of this year to support NVIDIA's upcoming Rubin processor. CLSA expects Samsung's total HBM shipments to triple in 2026 as HBM4 enters commercial supply. If Samsung successfully passes verification and achieves mass production, it would trigger another re-rating of its valuation logic—transitioning from merely benefiting from cyclical price hikes to becoming a key player in the core AI supply chain.

Downstream Pain: The Double-Edged Sword of Price Hikes However, the flip side of the coin is severe inflation in downstream hardware costs. TM Roh, Co-CEO of Samsung's Mobile, TV, and Appliance businesses, publicly acknowledged that the impact of rising memory chip prices is "inevitable" and did not rule out the possibility of increasing product prices. DB Securities analyst Seo Seung-yeon predicts that profits for Samsung's mobile business in the fourth quarter may decline year-on-year due to rising component costs. Counterpoint Research forecasts that prices for DDR5 memory used in computers and servers will increase by another 40% this quarter and continue to rise by 20% in the second quarter. This means that while Samsung's semiconductor division is reaping substantial profits, its consumer electronics division and customers like Apple are facing severe margin compression. Samsung is scheduled to release its full financial statements, including net profit and detailed breakdowns by division, later this month (expected on January 29th).