Samsung Electronics Co.’s quarterly profit surged 19-fold, just surpassing elevated expectations due to relentless demand for memory chips needed in AI data centers.
Earnings by the world’s largest memory maker are in the spotlight as investors seek to justify sky-high investments and valuations around AI. Global semiconductor shares jumped to record levels earlier this year, but have hit turbulence on fears about increased competition, possible overcapacity and whether plans for hundreds of billions of dollars in investment will pay off.
Samsung reported preliminary operating income of 89.4 trillion won ($58 billion) in the three months through June, dwarfing its performance for all of 2025. Analysts on average had projected 84.2 trillion won. Revenue more than doubled to 171 trillion won, also beating expectations. Samsung is slated to release a full financial statement, including net income and divisional breakdowns, around the end of the month.
Its shares shed 3% during pre-market trade in Seoul on Tuesday. Investors had harbored high hopes for Samsung and other chipmakers that are posting unprecedented profit margins thanks to a historic buildout of AI infrastructure worldwide.
“We will be looking for signs that this represents a sustainable step change in the company’s annual free cash generation,” said Brian Cho, a portfolio manager at Causeway Capital Management, adding that he would also be looking at management’s shareholder return policy.
The World Is Scrambling to Remake Semiconductor Supply Chains
A shortage in memory chips is a key bottleneck for AI development, executives including Nvidia chief Jensen Huang and OpenAI Chief Operating Officer Brad Lightcap have warned. Manufacturers are giving priority to high-end memory development to meet data centers’ needs, leading to inadequate volumes of conventional memory as well. Analysts expect shortages to last through 2027 at least, giving Samsung and rivals SK Hynix Inc. and Micron Technology Inc. enormous pricing power.
“Demand is so strong that they are trying to ship more products to their server customers, which typically tends to carry higher margins,” said Sanjeev Rana, head of research at CLSA Securities Korea. The company may be asking for significant price increases from big customers such as Nvidia Corp., he said.
Average operating profit margin for the three chipmakers is projected to trend around 75% to 80% in the June quarter, according to market research firm Counterpoint. Some argue that such margins constitutes excessive profiteering, it said in a report. “There can be regulatory pressure on memory players if this situation continues,” it said.
DRAM selling prices rose more than 40% in the April-June quarter from the previous three months, while NAND prices jumped more than 50%, according to HSBC.
Shares of Samsung, which has broad portfolio of chips and consumer electronic, have underperformed cross-town rival SK Hynix’s, which is more focused on high-end memory geared for AI’s computation needs. Samsung’s shares, which were hurt by a selloff in the five days to Friday, are up 165% this year, compared with SK Hynix’s roughly 260% gain.
The two chipmakers are central to South Korea’s ambitions to pull ahead of other countries to take leadership in AI. Samsung Group and SK Group plan to build two chipmaking plants apiece in the nation’s southwest for a total of 800 trillion won to expand capacity quickly. The country aims to double its memory production capacity within five years. For 2026, Samsung has announced plans to spend over $70 billion in production capacity expansion and research.
Chipmakers are enjoying an unprecedented rise in demand for the high-bandwidth memory essential to AI accelerators. But the shift in production is in turn fomenting a historic shortage of conventional memory chips that go into most modern devices, squeezing profits and inflating price tags.