Samsung Electronics is anticipated to record its highest third-quarter profit since 2022, driven by increased memory chip prices amid rising server demand as inventories are replenished. Analysts estimate an operating profit of around $7.11 billion for July-September, reflecting a 10% increase year-over-year. This recovery is largely attributed to improved pricing of conventional memory chips, which offsets weaker sales of high-bandwidth memory (HBM) chips, a product Samsung has yet to supply to Nvidia. HBM chips are essential for AI development, designed to process large datasets efficiently while consuming less power.
Demand for memory components, particularly from hyperscalers and AI investments supporting services like ChatGPT, has driven up the workload on servers, thereby boosting memory prices. Prices of DRAM chips, widely used in various devices, increased by 171.8% in Q3 compared to the same period last year. Despite this, delays in delivering the latest HBM3E chips have impacted Samsung’s profits and stock performance, allowing rivals SK Hynix and Micron to capitalise more on AI-driven demand. Samsung’s exposure to China, where U.S. sanctions limit the sale of advanced chips, further constrains its growth.
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Market sentiment is expected to improve as Samsung secures more supply deals with major clients, such as OpenAI and Tesla, with shares rising by over 43% following the announcement of a Tesla deal. Partnerships with OpenAI for the Stargate project and a $16.5 billion foundry deal with Tesla bolster prospects. However, uncertainties remain, including U.S. tariffs and China’s export controls. Analysts remain cautious but optimistic about Samsung’s future, especially if it continues securing key deals.
