Samsung Electronics is expected to report a nearly nine-fold increase in third-quarter operating profit, driven by strong artificial intelligence demand, although analysts have cut their forecasts as memory chip price growth slows.
The world’s largest memory chipmaker is expected to post operating profit of 106.1 trillion won (US$79.1 billion) for the July-September quarter, according to LSEG SmartEstimate based on forecasts from 21 analysts.
The estimate has been cut 7.7% since the end of August but would still mark Samsung’s fourth consecutive quarter of record operating profit, up from 12.17 trillion won a year earlier.
The prolonged memory shortage, driven by demand for AI infrastructure outpacing supply growth, is expected to persist into next year and potentially through 2028. However, slower chip price increases have raised concerns that margins may have peaked.
TrendForce expects conventional DRAM contract prices to rise 10% to 15% in the fourth quarter from the previous quarter, compared with a roughly 60% increase in the second quarter.
“Although the market remains in a tight supply position, the pace of price growth is expected to decelerate,” said Avril Wu, senior vice president for research at TrendForce.
Samsung’s memory-chip operating profit margin is expected to remain at 76% in the third quarter, unchanged from the previous quarter, according to SK Securities analyst Han Dong-hee.
The company is also facing higher costs for smartphones and consumer electronics as chip prices rise, while long-term supply agreements with customers are limiting further price increases in exchange for guaranteed supply.
Samsung said in July it aimed to secure long-term contracts covering about two-thirds of its memory output.
Competition from Chinese chipmakers is another concern, with Summit Insights Group senior research analyst Kinngai Chan saying an increasing number of original equipment and design manufacturers are adopting Chinese DRAM and NAND products.
The South Korean won’s 14.3% gain against the US dollar during the third quarter also poses a headwind by reducing the value of overseas earnings when repatriated.
Samsung is expected to provide preliminary third-quarter results on Thursday before releasing detailed results later this month.
Meanwhile, the company is expected to strengthen its position in high-bandwidth memory chips used in AI data centres. J.P. Morgan estimates Samsung’s HBM market share will rise to 34% this year from 20% last year, while SK Hynix’s share is expected to fall to 46% from 60%.
Reuters
