Key Takeaways
- Samsung Electronics projects a record $80.17 billion profit for the third quarter.
- The company attributes the surge to booming demand for AI chips and strong memory sales.
- Despite record earnings, Samsung shares fell slightly due to concerns over the AI boom's sustainability.
Samsung Electronics has projected a record quarterly profit of $80.17 billion, marking the highest earnings for any technology company. The company's third-quarter earnings are expected to top 100 trillion won, a significant jump from the previous quarter.
The surge in profits is attributed to the booming demand for AI chips, which have driven strong sales of memory chips. Analysts predict that memory chip prices will rise 10% to 15% in the fourth quarter, a slowdown from the second quarter's 60% surge.
Samsung's memory chip business is expected to account for the bulk of the earnings improvement, with prices soaring due to tight supply and growing demand for high-bandwidth memory (HBM) essential for AI applications.
However, the memory chip boom presents challenges for Samsung's other divisions. The company's mobile business posted a larger-than-expected loss of over $1 billion in the third quarter, as higher component costs put pressure on its smartphone and consumer electronics divisions.
Despite the record earnings, Samsung's share price slipped 0.2% in early trade, reflecting market concerns about the sustainability of the AI boom. Analysts at Mirae Asset Securities noted that the market's focus has shifted to whether the sharp earnings growth that started a year ago will be sustainable.
Samsung expects its revenue to rise 127% to 195 trillion won from a year earlier, with detailed results, including a breakdown of earnings by business division, to be released on October 29.
The company faces risks from potential slowdowns in AI spending and increased competition from Chinese firms. Analysts also expect profit growth to slow in the fourth quarter, with a 8.2% increase from the previous quarter, down from 20% sequential growth in the third quarter.
Market research firm TrendForce predicts that conventional DRAM contract prices will rise 10% to 15% in the fourth quarter, a moderation from the second quarter's significant increase. This moderation is being closely watched by investors after a year-long rally that propelled profit margins to record highs for the world's largest memory producers.
The market's focus has shifted to whether the sharp earnings growth that started a year ago would be sustainable.
Kim Seok-hwan, Market analyst at Mirae Asset Securities
