Key facts
- Samsung Electronics is expected to report a third-quarter operating profit of 106.1 trillion won ($79.1 billion).
- The expected profit represents a nearly nine-fold increase from 12.17 trillion won a year earlier.
- Analysts have cut forecasts by 7.7% since the end of August.
- Conventional DRAM contract prices are expected to rise 10% to 15% in the fourth quarter.
- Samsung's memory-chip operating profit margin is projected to be flat at 76% in the third quarter.
- Samsung's HBM market share is forecast to increase to 34% in 2024 from 20% in 2023.
Samsung Electronics is poised to report a significant surge in third-quarter operating profit, with expectations of a nearly nine-fold increase to 106.1 trillion won ($79.1 billion), driven by robust demand for artificial intelligence (AI) infrastructure. This marks a substantial improvement from the 12.17 trillion won recorded a year prior, continuing a trend of record profits amid a prolonged memory chip shortage.
Despite the strong headline profit, analysts have tempered their outlook, slashing forecasts by approximately 7.7% since late August. The moderation in memory chip price increases during the third quarter has raised concerns that profit margins may have peaked, casting a shadow over the sustainability of the AI spending boom. Long-term supply deals, designed to guarantee supply in exchange for price stability, have also contributed to slowing price growth.
TrendForce anticipates conventional DRAM contract prices to rise between 10% and 15% in the fourth quarter, a deceleration from the approximately 60% surge seen in the second quarter. Suppliers are cautious about further steep price hikes that could dampen demand for consumer electronics. Samsung itself aims to secure long-term contracts for about two-thirds of its memory output to mitigate industry volatility.
Samsung's memory-chip operating profit margin is projected to remain flat at 76% in the third quarter, according to SK Securities. The company also faces increasing competition from Chinese rivals in lower-end products. Additionally, a strengthening South Korean won, which gained 14.3% against the dollar in the third quarter, is expected to reduce the value of repatriated overseas earnings.
In the crucial high-bandwidth memory (HBM) chip market for AI data centers, Samsung is narrowing the gap with market leader SK Hynix. J.P. Morgan estimates Samsung's HBM market share will rise to 34% this year from 20% in 2023, while SK Hynix's share is forecast to decline to 46% from 60%.