Samsung’s guidance that the chip shortage will deepen next year is the most market-relevant line. It points to continued pricing power for memory makers and supports the read-through from SK Hynix’s upbeat outlook a day earlier. That backdrop fits with the heavy capex plans from US hyperscalers, Microsoft’s call among them, which underpin demand. The net profit miss may temper the reaction, though the operating figures were pre-announced and the market will focus on the outlook. The weakness in mobile and display highlights how concentrated Samsung’s earnings have become on a single cycle, leaving the stock exposed to any wobble in AI spending sentiment.
—
Yesterday:
—
Samsung has become an AI memory company with a phone business attached, and for now that’s a very profitable thing to be.
Summary:
- Q3 operating profit rose nearly ninefold to around 107 trillion won (about $80 billion), in line with Samsung’s estimate
- Revenue of around 195 trillion won was in line, but net profit of around 75 trillion won missed estimates of about 84 trillion won
- The chip division earned 106.5 trillion won, while mobile posted a loss of around 600 billion won and display earned around 1.1 trillion won
- Samsung expects memory demand to keep expanding in Q4 and the chip shortage to deepen next year
- Foundry revenue rose sharply and is expected to grow by a double-digit percentage in Q4
- A third-quarter dividend of around 30 trillion won, or 4,601 won per share, was declared
Samsung Electronics posted a record operating profit for the third quarter, up nearly ninefold from a year earlier, as booming demand for chips used in artificial intelligence drove its semiconductor business to unprecedented earnings, Reuters reported.
Operating profit reached around 107 trillion won, roughly $80 billion, matching the company’s preliminary estimate and up from about 12 trillion won a year earlier. Revenue came in at around 195 trillion won, also in line with guidance. Samsung said it became the first global technology company to post quarterly operating profit above 100 trillion won.
Net profit was weaker relative to expectations, at around 75 trillion won against an LSEG SmartEstimate of roughly 84 trillion won, a shortfall of more than 8 trillion won.
The chip division generated an operating profit of 106.5 trillion won, accounting for almost all of the group’s earnings. Samsung said memory chip demand would keep expanding in the fourth quarter and that the chip supply shortage would deepen next year. Its foundry business, which makes chips to order for other companies, saw revenue rise sharply in the quarter and is expected to grow by a double-digit percentage in the fourth quarter.
The rest of the business painted a very different picture. The mobile division swung to an operating loss of around 600 billion won, while the display unit earned around 1.1 trillion won. Samsung expects demand weakness in its display business to continue into 2027.
The company also announced a third-quarter dividend totalling around 30 trillion won, or 4,601 won per share.
The results came a day after cross-town rival SK Hynix reported strong earnings and an upbeat outlook, which helped ease concerns that AI-driven chip profits could lose momentum and lifted shares of both companies. Investors nonetheless remain cautious about how long the current pace of AI spending can last.
With Samsung forecasting a tighter chip market next year, the key question for investors is whether hyperscaler demand holds up as major customers report spending plans of their own.
This article was written by Eamonn Sheridan at investinglive.com.