Samsung reported a record operating profit of $80.17 billion for the July-September period. This massive 782.5% jump happened because many tech companies need advanced memory chips for AI systems. While the chip business grew, Samsung’s mobile division got hit by high costs and posted a loss of over $1 billion.
South Korean tech giant Samsung is smashing records. According to its latest preliminary earnings report for the July-September period, the company is projected to hit an operating profit of roughly $80.17 billion (107.4 trillion).
To put that into perspective, this makes Samsung the first technology company in the world to cross the 100 trillion won profit mark in a single quarter. Compared to the same time last year, the company's profit has skyrocketed by nearly 9 times, a massive 782.5% jump. The company's total revenue also surged by 127% to 195 trillion, easily beating market expectations.
Why is Samsung making so much money?
The short answer is Artificial Intelligence (AI).
While you might know Samsung best for its Galaxy smartphones, the company's biggest cash cow right now is its semiconductor business. As tech companies rush to build complex AI systems, they desperately need advanced memory to train their models.
This has created an unprecedented global shortage of conventional DRAM and NAND chips, alongside high-bandwidth memory (HBM) chips that are essential for AI processing. With demand far outpacing supply, chip prices have shot up sharply. Thanks to this tight supply, top memory producers like Samsung are enjoying gross margins of over 80%. This marks Samsung's fourth straight quarter of record operating profits.
Samsung is also expanding its HBM production, with estimates showing that its HBM shipments grew by nearly 50% in the third quarter alone compared to the previous quarter.
The flip side: Smartphones are feeling the heat
But this memory chip boom comes with a catch for Samsung's other businesses. Because memory chips are getting so expensive, the cost of manufacturing consumer electronics has gone up.
Due to these mounting component costs, Samsung's mobile business actually posted a larger-than-expected loss of more than $1 billion in the third quarter. Meanwhile, Samsung's contract chipmaking (foundry) business also remains at a loss right now due to high fixed costs, though demand for advanced manufacturing is expected to improve.
What does this mean for the future
The AI wave shows no signs of stopping immediately. Both Samsung and its rival Micron expect the global memory chip shortage to last well into 2028.
However, investors are keeping a close eye on how long this crazy growth can last. Market analysts expect Samsung's profit growth to slow down a bit in the fourth quarter to 8.2%, compared to the massive 20% sequential growth seen in Q3.
This is largely because the aggressive price hikes for memory chips are starting to cool off; conventional DRAM contract prices are expected to rise by only 10% to 15% in Q4, a sharp drop from the 60% surge seen in the second quarter.
Samsung will release its full, detailed earnings report, with a complete breakdown of each business division on October 29.