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Samsung Q3 profit seen surging nearly ninefold, but chip margins may be flat
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Samsung Electronics is expected to report a third-quarter operating profit of approximately 106.1 trillion won ($791 billion), a nearly nine-fold increase year-on-year, driven by strong AI demand for memory chips. However, analysts have downgraded forecasts by 7.7% since late August due to slowing memory chip price increases and a stronger South Korean won. The profit would mark Samsung's fourth consecutive quarterly record, highlighting a prolonged memory shortage fueled by AI infrastructure demand that is expected to last into 2028. Despite this, concerns are rising that chip profit margins may have peaked, as DRAM contract price growth slows from about 60% in Q2 to an estimated 10-15% in Q4, according to TrendForce. Samsung's memory chip operating margin is estimated at 76%, flat from the prior quarter, per SK Securities analyst Han Dong-hee. The company faces headwinds from increased competition from Chinese chipmakers, a strong won reducing overseas earnings value, and rising long-term supply agreements that cap price increases. Samsung is narrowing the gap with SK Hynix in high-bandwidth memory (HBM) chips, with Morgan Stanley estimating its HBM market share will rise from 20% to 34% this year. Samsung will release preliminary Q3 results on Thursday.
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Seoul, October 7 — Samsung Electronics is expected to report a nearly ninefold increase in third-quarter operating profit, driven by robust demand for artificial intelligence (AI). However, analysts have lowered their forecasts by nearly 8% since late August.
Key Financial Outlook
The world's largest memory chip maker is projected to post an operating profit of 106.1 trillion Korean won (approximately $79.1 billion) for the July–September quarter. This estimate is based on the LSEG SmartEstimate, which aggregates forecasts from 21 analysts and gives greater weight to those with stronger track records. The figure has been revised downward by 7.7% since late August.
This would mark a significant jump from 12.17 trillion won in the same period last year, representing Samsung's fourth consecutive quarter of record operating profit. The results underscore a prolonged memory chip shortage driven by AI infrastructure demand outpacing supply growth. Chipmakers expect the shortage—which began over a year ago—to persist into next year and possibly extend to 2028.
Concerns Over Chip Margins
Despite the strong profit outlook, price increases for memory chips slowed in the third quarter, raising concerns that chip margins may have peaked. This has also cast doubt on the sustainability of the AI spending boom.
Samsung is scheduled to release its preliminary Q3 results on Thursday, with detailed figures to follow in late October.
Slowing Price Growth
The deceleration in memory chip price gains has drawn investor attention, following a more than year-long rally driven by AI demand that generated record profits and margins for major players including Samsung, SK Hynix, and Micron.
- High-priced chips have increased costs for smartphones and consumer electronics, dampening demand.
- Long-term supply agreements have limited price increases in exchange for guaranteed supply.
According to TrendForce, conventional DRAM contract prices are expected to rise 10%–15% quarter-on-quarter in Q4, a sharp slowdown from the roughly 60% increase seen in Q2.
Avril Wu, Senior Vice President of Research at TrendForce, noted: "Although the market remains in a tight supply state, the pace of price increases is expected to slow." Suppliers are concerned that further significant price hikes could harm broad consumer electronics demand. Additionally, the rising share of long-term contracts—which include built-in price caps—has tempered the pace of increases.
Strategic Shifts and Competition
Samsung stated in July that it aims to secure long-term contracts for about two-thirds of its memory chip output, following a broader industry trend to reduce the impact of cyclical fluctuations.
Meanwhile, U.S. rival Micron has indicated that chip markets could be even tighter in 2027 and 2028 than this year. However, it expects its gross margin to edge down slightly from 87% to 86.3% this quarter, partly due to employee compensation costs.
Competition from China
Samsung also faces growing competition from Chinese rivals, which—while focused on lower-end products—are benefiting from the AI-driven memory shortage.
Kinngai Chan, Senior Research Analyst at Summit Insights Group, stated in a report: "Industry checks show that more and more OEMs and ODMs are adopting Chinese DRAM and NAND."
Currency Headwinds
Exchange rate fluctuations present another challenge. The Korean won strengthened 14.3% against the U.S. dollar in the third quarter, rebounding sharply from a 17-year low. This marks the largest quarterly gain since early 1998 and reduces the value of overseas earnings when repatriated.
Samsung's stock has fallen approximately 25% from its June record, though it remains more than double its level at the start of the year.
High Bandwidth Memory (HBM) Progress
Samsung is expected to boost sales of High Bandwidth Memory (HBM) chips, a critical component for AI data centers, as it narrows the gap with market leader SK Hynix.
The company had fallen behind in HBM supply due to delays in product certification from Nvidia. However, it has made progress this year by expanding shipments of its latest HBM4 chips.
According to J.P. Morgan, Samsung's HBM market share is projected to rise from 20% last year to 34% this year, while SK Hynix's share is expected to decline from 60% to 46%.
Source: Reuters — https://www.reuters.com/world/china/samsungs-q3-profit-seen-jumping-nine-fold-chip-margins-may-be-flat-2026-10-06
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