Samsung Electronics reported a staggering 19-fold year-on-year surge in quarterly operating profit, significantly exceeding market expectations and highlighting the explosive growth in demand for memory chips from AI data centers.
The company disclosed that its preliminary operating profit for the second quarter ending in June reached 89.4 trillion won (approximately $580 billion), surpassing not only the average analyst forecast of 84.2 trillion won but also its full-year 2025 performance.
Revenue for the same period was 171 trillion won, higher than the market consensus of 169.2 trillion won. Samsung Electronics Co., Ltd. is expected to release its full earnings report, including net profit and detailed segment data, by the end of this month.
This sharp rise in performance directly benefits from the intensifying market shortage of memory chips. Technology industry leaders, including the CEOs of Nvidia and OpenAI, have stated that the memory chip shortage has become a core bottleneck for AI development.
Analysts predict the tight supply situation will persist at least until 2027, granting Samsung Electronics Co., Ltd. and its competitors, SK Hynix and Micron Technology, significant pricing power.
Concurrently, concerns over whether the high valuations and massive investments in AI can be sustained are weighing on the global semiconductor sector, making Samsung's results a key focus for investors.
Rising Chip Prices and Broadening Shortages
According to HSBC data, the average selling price for DRAM in Q2 increased by over 40% from the previous quarter, while NAND flash prices rose by more than 50%.
This price surge stems from a structural supply-demand imbalance. Semiconductor manufacturers are prioritizing production capacity for high-end memory chips to meet the urgent demand for High Bandwidth Memory (HBM) from AI data centers, leading to a severe shortage of standard memory chips.
These standard chips are widely used in most consumer electronics devices. Their shortage is squeezing the profits of related manufacturers and driving up the prices of end products, creating a new wave of cost pass-through effects.
Despite the stellar results, Samsung Electronics Co., Ltd.'s stock market performance has lagged behind its rivals. Its shares have risen about 165% year-to-date, while SK Hynix, which is more focused on high-end AI memory, has gained approximately 260%. In the five trading days leading up to last Friday, Samsung's stock experienced a notable decline.
The difference in strategic focus is a key factor. SK Hynix is more targeted in the HBM segment designed for AI accelerators, whereas Samsung's business spans a broader range, including chips and consumer electronics. This overall product mix limits the relative benefit it receives from the current AI memory boom.
South Korea's Massive Investment in AI Memory Production
Samsung's strong performance also reflects South Korea's strategic ambition in the global AI race.
The Samsung Group and SK Group plan to build two new chip fabrication plants each in the southwest of the country, with a combined investment of 800 trillion won, to rapidly expand production capacity. South Korea aims to double its domestic memory chip production capacity within five years.
Samsung Electronics Co., Ltd. has announced plans to spend over $70 billion on capacity expansion and research & development by 2026.
Global semiconductor stocks had climbed to record highs earlier this year, but doubts about intensifying competition, potential overcapacity, and the return on trillions of dollars in investments have recently put significant pressure on the sector.
Samsung's better-than-expected results may provide some short-term confidence to the market.