Samsung Electronics said it expects its third-quarter operating profit to jump roughly nine-fold from a year earlier, driven by demand for semiconductors used in artificial intelligence systems. The South Korean company's guidance, released Tuesday, points to a sharp recovery in its memory chip business after a prolonged slump.
The profit forecast underscores how AI has become the main engine of growth for chipmakers, as data centers and technology companies race to build infrastructure for large language models and other AI applications. Samsung is the world's largest maker of memory chips, and its results are closely watched as a barometer of broader demand.
What's behind the profit jump
Samsung's semiconductor division has been the primary beneficiary of soaring demand for high-bandwidth memory, or HBM, which is used in AI accelerators. The company has been working to catch up with rivals in supplying HBM to major AI chip designers, and the latest quarter suggests those efforts are paying off.
The memory market has rebounded from a severe downturn that began in late 2022, when oversupply and weak demand for consumer electronics crushed prices. Chipmakers responded by cutting production, and the resulting tighter supply has combined with the AI boom to lift prices for advanced memory products.
The scale of the profit increase — nine times the year-earlier figure — reflects both the depth of last year's trough and the strength of the current upcycle. It also signals that AI-related spending by cloud providers and enterprises remains robust, even as some analysts have questioned how long the surge can last.
Competition intensifies
Samsung isn't alone in chasing AI chip demand. Smaller rival SK Hynix has been a major supplier of HBM to Nvidia, the leading AI chip company, and has reported strong results in recent quarters. Micron Technology, based in the U.S., is also expanding its HBM output.
The competition is pushing all three companies to invest heavily in new capacity and advanced packaging techniques. Samsung has pledged billions of dollars in capital spending to expand HBM production and improve yields, which have lagged behind those of its competitors.
The company's foundry business, which manufactures chips for other firms, is also trying to win AI-related orders. That unit has struggled with yield issues and stiff competition from Taiwan Semiconductor Manufacturing Co., but any improvement there could add to Samsung's overall momentum.
The broader industry picture
Samsung's guidance comes as the semiconductor industry undergoes a structural shift. AI workloads require different types of chips and more of them, from powerful GPUs to the memory that feeds them. That's reshaping supply chains and investment priorities across the sector.
The profit surge also highlights the uneven nature of the recovery. While AI chips are booming, demand for memory used in smartphones and personal computers has been slower to bounce back. Samsung's mobile and display businesses may not see the same lift as its chip unit.
Investors will get a fuller picture when Samsung reports final third-quarter results later this month. The company typically provides detailed divisional breakdowns then, which will show exactly how much of the profit came from semiconductors versus other businesses.
What to watch
Two things matter most in the coming weeks. First, whether Samsung can maintain its HBM momentum and narrow the gap with SK Hynix. Second, how the company plans to allocate capital going forward — more spending on AI memory could pressure margins in the short term but is necessary to stay competitive.
The final results, due later this month, will also reveal whether the profit surge is concentrated in a few product lines or reflects broad-based strength. For now, the guidance makes one thing clear: AI demand is driving the chip industry's recovery, and Samsung is determined to capture its share.
