Samsung Electronics said the current shortage of memory chips is expected to worsen through 2027 and persist into 2028, a forecast delivered alongside a more than 250-fold jump in operating profit at its semiconductor division. The division's operating profit reached 89.2 trillion won in the second quarter, up over 250-fold from a year earlier, while Samsung's group-wide operating profit came to 89.5 trillion won ($61.98 billion), in line with the company's own estimate of 89.4 trillion won and up from 4.68 trillion won a year earlier. Revenue for the April-to-June period rose 130% to 171.5 trillion won.
Jaejune Kim, executive vice president of Samsung's memory business, told analysts that next year's supply shortage would be worse than this year's and would continue into 2028. He said Samsung has signed long-term supply agreements with the five largest global data centre companies and is close to finalising deals with five additional large firms, without identifying them. The agreements, he said, will run for at least five years, cover 60% to 70% of Samsung's total capacity over the longer term, and include upfront payments and floor pricing intended to offset the risk attached to its capital spending programme.
The rise in memory prices that lifted the chip division came at the expense of Samsung's mobile business, which recorded a loss of 700 billion won, its first quarter in the red. Josh Gilbert, an analyst at eToro, said the same forces lifting Samsung's chip earnings have left the group more vulnerable to shifts in memory pricing and to whether hyperscaler AI spending continues at its current pace. Ryu Young-ho, a senior analyst at NH Investment & Securities, described management's commentary on the earnings call as more reassuring than in recent memory.
Samsung said it expects HBM4 revenue to more than triple in the third quarter, which would bring its share of the high-bandwidth memory market in line with its broader DRAM market share in the second half. Nvidia and Advanced Micro Devices are named among its HBM customers, while Samsung's foundry business, which competes with TSMC and Intel, is expected to turn around in the near future as factory utilisation rates and chip prices rise. The company said it remains on track to begin operations at its Taylor, Texas plant this year and aims to break ground on a second fab there.
Samsung's shares rose as much as 8% before paring gains to trade down 1.1%. The results followed SK Hynix, which reported bumper quarterly results a day earlier that nonetheless fell short of elevated investor expectations; SK Hynix said it plans to raise capital spending this year by around 50% to meet AI-related demand. Samsung chief financial officer Park Soon-cheol said the company is not considering an American depositary receipt listing following SK Hynix's recent US market debut, citing stable cash generation from its diversified business portfolio.
The upfront payments and floor pricing built into Samsung's new supply contracts are intended to hedge the risk attached to its capital investment programme, which continues to expand as the company works toward starting operations at its Taylor, Texas plant this year and prepares to break ground on a second fab there, which could begin mass production in 2030.
