Samsung Electronics anticipates announcing a nearly ninefold surge in third-quarter operating profit, propelled by robust demand for artificial intelligence processors. At the same time, a deceleration in memory chip price increases and an appreciating South Korean won are sparking worries regarding the longevity of its record profit margins.
Samsung Q3 Profit Estimate
As the globe’s leading manufacturer of memory chips, Samsung is projected to achieve an operating profit amounting to 106.1 trillion won ($79.1 billion) for the July through September period, drawing from an LSEG SmartEstimate derived from projections by 21 analysts.
This forecasted figure represents a dramatic increase compared to the 12.17 trillion won recorded in the same period last year, which would establish Samsung’s fourth straight quarter of record-breaking operating profit. Even so, analysts have lowered their projections by 7.7% since late August.
This optimistic earnings projection stems from an extended worldwide shortage of memory chips, driven by AI infrastructure demand outstripping supply expansion. Manufacturers anticipate that this shortage, which commenced over a year ago, will persist through 2027 and potentially extend into 2028.
Memory Chip Margins Under Pressure
Despite robust demand, the momentum behind memory chip price growth moderated during the third quarter. Investors worry that profit margins for these chips may have reached their ceiling, prompting doubts over whether the current surge in AI spending can maintain these elevated profit levels.
According to Han Dong-hee, an analyst at SK Securities, Samsung’s operating profit margin for memory chips is projected to hold steady at 76% in the third quarter, matching the previous period.
Furthermore, TrendForce anticipates conventional DRAM contract prices will climb between 10% and 15% during the fourth quarter, representing a significant slowdown from the 60% jump witnessed in the second quarter. Additionally, long-term supply agreements are capping price hikes in exchange for guaranteed inventory.
Also Read: NVIDIA Raises AI Chip Prices, Forcing Silicon Valley to Rethink AI Strategy
Stronger Won Adds to Pressure
During the third quarter, the South Korean won climbed 14.3% against the US dollar, registering its most significant quarterly advance since the beginning of 1998. This currency appreciation diminishes the won-denominated value of Samsung’s international revenue.
Additionally, Samsung confronts mounting rivalry from Chinese memory chip manufacturers, particularly within lower-tier market segments.
On a brighter note, Samsung anticipates growing sales of high-bandwidth memory (HBM) chips, which power AI data centers. The company’s portion of the HBM market is forecasted to climb to 34% this year, up from 20% last year, whereas SK Hynix anticipates its market share dropping to 46% from 60%.
Samsung plans to publish its preliminary third-quarter financial figures on Thursday, followed by the comprehensive earnings report later in October.
