Samsung Electronics has reported a remarkable operating profit of ₩89.5 trillion (€54 billion) for the April-to-June period, marking a 56% increase compared to the previous quarter and a nearly 19-fold jump from the same time last year. This surge in profitability was primarily driven by the semiconductor division, which contributed nearly all of the company's total profit. Despite this success, the mobile, TV, and home appliances division recorded an operating loss, partly attributed to rising component costs.
The semiconductor business alone saw its operating profit soar to ₩89.2 trillion (€53.8 billion), a staggering 223 times the ₩0.4 trillion (€241 million) it made a year earlier. This meteoric rise was fueled by increased chip prices, which are being driven by growing demand for AI servers and higher shipments of advanced high-bandwidth memory chips used to power AI applications. These developments have helped the semiconductor division outperform despite challenges in other business segments.
Samsung forecasts that demand for memory chips will remain robust in the second half of the year, thanks to the rapid expansion of AI infrastructure. However, the company cautioned that the market for server chips may face increasing supply shortages, with chip shortages expected to worsen in 2027 and possibly persist into 2028. Kim Jaejune, an executive vice-president of Samsung’s memory chip division, highlighted that the gap between chip supply and demand is likely to grow as AI applications continue to evolve and expand.
To address growing demand, Samsung is on track to start operations at its first semiconductor fabrication plant in Taylor, Texas, later this year. The company also announced plans to begin construction on a second factory, which is projected to enter mass production in 2030. These initiatives are part of Samsung’s strategy to secure long-term chip supply contracts with five of the world’s largest data centre companies. While the identities of these companies were not disclosed, the Associated Press reported that they may include Amazon Web Services, Google, Meta, Oracle, and Microsoft.
Despite reporting record profits, Samsung’s shares have experienced a sharp decline in South Korea’s fluctuating stock market. This drop has been influenced by concerns about the company’s capital-intensive expansion plans and growing competition from Chinese firms. South Korea’s tech stocks are particularly sensitive to retail investor activity, often leading to significant volatility in share prices.
Samsung’s strong financial performance was reported just one day after its rival, SK Hynix, also announced record quarterly revenue and operating profit. Both companies are emerging as dominant players in the global AI chip race. Samsung and SK Hynix collectively produce about two-thirds of the world’s memory chips, and both are investing heavily in new manufacturing facilities and data centres as South Korea pushes forward with its AI development agenda.
Earlier this week, South Korean President Lee Jae Myung visited San Francisco alongside executives from Samsung, SK Hynix, and Hyundai. During the trip, they announced hundreds of billions of dollars in potential collaborations with major U.S. technology firms, including chip designers Nvidia and Broadcom, as well as AI startups like OpenAI and Anthropic. These partnerships span various AI technologies, data centres, and other foundational infrastructure components.
The collaboration efforts reflect a global trend among tech firms seeking reliable memory chip suppliers as AI demand continues to rise. At a recent roundtable with foreign media, Kim Yong-beom, Lee’s chief policy adviser, stated that the new alliances demonstrate the eagerness of international companies to secure stable chip supplies in a rapidly evolving technological landscape.
Analysts are closely monitoring whether these substantial investments will yield the necessary returns to justify the financial risks involved. While demand for memory chips is growing at a rapid pace, some experts caution that there is no certainty the market will support such aggressive expansion without leading to price declines. Son In-joon, a semiconductor analyst at South Korea’s Eugene Investment & Securities, noted in a recent report that investors are increasingly shifting focus from short-term profits to evaluating long-term sustainability.
The volatility in Samsung’s and other tech firms’ share prices underscores this shift in investor priorities. As the global AI market expands, companies must demonstrate not only immediate gains but also the capacity to maintain profitability and stability over time. The partnerships and infrastructure investments being pursued by South Korean firms are central to their ability to meet these evolving expectations and remain competitive on the world stage.