Samsung estimates record Q3 operating profit of 107.4tn won, nearly nine-fold, on AI chip demand

Centre · 2Samsung Electronics said on Thursday 8 October that it expects third-quarter operating profit of 107.4 trillion won (about $80bn), a nearly nine-fold rise from a year earlier, according to a regulatory filing. 1 2 Centre · 1The figure was slightly above the LSEG SmartEstimate of 106.1 trillion won, which had been cut by 7.7 per cent since the end of August, and compares with 12.17 trillion won a year earlier. 1 3 Centre · 1It is Samsung's fourth consecutive quarter of record operating profit, and CNA reported it as the first quarterly profit above 100 trillion won for a technology company. 4

Centre · 1Samsung also said third-quarter revenue would likely rise 127 per cent to 195 trillion won, with detailed results, including a breakdown by division, due on 29 October. 4 Centre · 2The jump is attributed to a global memory shortage, with AI infrastructure demand outpacing supply growth and pushing up prices for conventional DRAM and NAND chips as well as high-bandwidth memory (HBM) used in AI data centres. 4 2 Centre · 1The BBC added that Samsung should also get a lift from folding phones launched in August, and noted that Korean firms usually issue earnings previews ahead of fuller reports. 2

Centre · 1Before the announcement, CNA reported that the pace of memory price increases had slowed, raising concerns that margins may have peaked. TrendForce expected conventional DRAM contract prices to rise 10 to 15 per cent in the fourth quarter, against a surge of roughly 60 per cent in the second quarter. 3 Centre · 1SK Securities estimated Samsung's memory operating margin at 76 per cent, flat on the previous quarter. Samsung has said it aims to cover about two-thirds of its memory output with long-term contracts, which TrendForce said carry ceiling-price mechanisms that slow price rises. 3 Centre · 1Analysts cited several risks: a won that strengthened 14.3 per cent against the dollar in the quarter, reducing the value of overseas earnings; growing Chinese competition in memory; and possible US semiconductor tariffs. Higher memory costs are also squeezing Samsung's smartphone and consumer electronics margins, and its foundry business is expected to stay loss-making. 3 4

Centre · 1Samsung is gaining ground in HBM against market leader SK Hynix. J.P. Morgan estimates its share will reach 34 per cent this year from 20 per cent last year, while Douglas Kim estimated its third-quarter HBM bit shipments rose close to 50 per cent from the previous quarter. 3 4 Centre · 1Yuanta Securities analyst Lee Jae-won said the results were better than expected despite earlier estimate cuts, and that investors would watch for details of Samsung's shareholder return policy on the earnings call. Samsung shares have fallen about 25 per cent from a June record but remain more than double their level at the start of the year. 4 3