SAMSUNG Electronics yesterday reported record quarterly profit driven by a 49-fold jump in chip income, saying it expects a severe supply shortage to deepen next year as clients spend on AI, driving up prices of its memory chips.
The world’s top memory chipmaker by sales also said it has signed multi-year binding contracts with customers hoping to lock in supplies, without disclosing identities or terms.
A boom in the construction of AI data centres has spurred Samsung and chipmaking peers to allocate production capacity to advanced chips that Nvidia uses in its so-called AI accelerators. Even so, chipmakers are struggling to meet demand while the move also squeezes the supply of conventional chips.
“Our supply falls far short of customer demand,” Kim Jaejune, a Samsung memory chip business executive, told analysts on its post-earnings call. “Based solely on the demand currently received for 2027, the supply-to-demand gap for 2027 is set to widen even further than in 2026.”
Continued development in AI technology will translate into sustained demand growth yet supply will remain constrained for the time being considering the lead time required for new factory construction, Kim said.
A day earlier, US technology majors including Alphabet, Amazon and Microsoft all signalled sustained AI spending.
Revealing the extent of the AI boom, Samsung said January-March operating profit in its cash cow chip division reached a record 53.7 trillion won ($36.15 billion) from just 1.1trn won in the same period a year earlier.
That made up 94 per cent of the quarter’s 57.2trn won record total. That figure matched Samsung’s estimate announced earlier this month and compared to 6.69trn won a year prior.
Overall revenue rose 69pc on year to 133.9trn won.
Samsung said conflict in the Middle East has not disrupted chipmaking as the firm has secured inventory and diversified sources of gases used in manufacturing. However, it flagged the risk of higher transportation costs caused by rising oil prices, and said it will ensure stable power supplies in cooperation with the South Korean government.
Shares of Samsung slipped 2.4pc after rising as much as 1.8pc following the earnings announcement. The stock has surged 88pc this year, outstripping the broader market’s 57pc gain.
The decline was likely due to investors taking profit after the stock had rallied in anticipation of robust earnings, said Hyundai Motor Securities analyst Greg Noh, who is bullish about Samsung’s 2026 outlook.
Samsung has been trying to narrow the gap with compatriot SK Hynix in supplying high bandwidth memory (HBM) chips to Nvidia, having fallen behind to the detriment of both profit and share price.
SK Hynix last week reported record quarterly profit following a fivefold jump in earnings and forecast a prolonged chip industry boom, downplaying any concern about profit margins for chips nearing their peak.
Yesterday, Samsung said it started the industry’s first mass-production sales of HBM4 chips for Nvidia’s Vera Rubin platform in February and that it is on track to more than triple HBM revenue this year versus last year.
It also said it expects to increase capital expenditure sharply this year to meet AI demand.
Still, it is bracing for potential production disruption as unions representing the majority of its workers in South Korea, especially in its chip division, consider striking over pay.
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