Key Points
- Samsung projects a 32% jump in its third-quarter operating profit, beating estimates.
- The surge is driven by booming demand for conventional memory chips used in AI servers.
- This would be Samsung’s highest quarterly profit in over three years. Prices for some types of DRAM chips have soared by 171% in the last year.
- The strong performance in conventional chips offset weaker-than-expected sales of its most advanced HBM chips.
Samsung Electronics on Tuesday projected a huge 32% jump in its third-quarter operating profit, blowing past analyst estimates. The world’s largest memory chipmaker is riding a wave of massive demand for the server and AI-related chips that are powering the global tech boom.
The company estimated its operating profit for the July-September period at 12.1 trillion won ($8.5 billion), marking its highest quarterly profit in over three years. The “earnings surprise came from the chip business,” said one analyst.
The driving force behind the stellar results is the surging demand for conventional memory chips, like DRAM and NAND, which are essential components in the servers needed for AI. The prices for some of these chips have skyrocketed, with one type of DRAM chip jumping 171% in the third quarter compared to last year.
Interestingly, the huge gains in conventional chips helped to offset weaker-than-expected sales of Samsung’s most advanced high-bandwidth memory (HBM) chips. While the company’s progress in supplying these top-tier chips to major customers like Nvidia has been slower than hoped, the boom in the rest of its chip business more than made up for it.
Samsung’s stock has rallied 75% to record highs this year, but analysts are still cautious. They point to several risks on the horizon, including potential U.S. tariffs, the escalating U.S.-China trade war, and China’s new export controls on rare earth materials.
