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Samsung Reports Record Q3 Revenue in Memory Chips
Samsung Electronics (005930.KS) is ramping up its focus on producing high-end memory chips as global demand for artificial intelligence (AI) infrastructure is expected to outpace supply. The company reported record quarterly revenue from its memory chip segment on Thursday, signaling a strong rebound after several quarters of underperformance in the AI chip race.
Record Revenue in Memory Chips
The South Korean tech giant posted an operating profit of 7 trillion won ($4.92 billion) in Q3, representing an 80% increase from the previous year. Revenue from its memory chip business reached 26.7 trillion won, up from 22.3 trillion won a year ago. This marks a significant turnaround, driven largely by an unexpected boom in conventional chip prices and rising demand for AI-related applications.
Kim Jaejune, a Samsung executive overseeing the memory chip business, told analysts during the post-earnings call, “It is expected that customers’ demand for the next year will exceed our supply, even considering our investment and capacity expansion plan.”
High-Bandwidth Memory in Focus
Samsung plans to expand production of high-bandwidth memory (HBM) chips, which are critical components in AI chipsets. The company also intends to increase capital spending sharply next year to accommodate the growing demand.
Kim highlighted the accelerated demand, saying memory chip consumption would be “much stronger and faster than usual,” which is expected to push prices higher. This aligns with the broader market trend of a chip supply crunch, particularly as manufacturers prioritize advanced AI memory products over conventional applications.
Industry-Wide Chip Shortage
Samsung’s optimistic outlook mirrors comments from rival SK Hynix (000660.KS), which recently stated that a prolonged chip “super cycle” is underway, fueled by AI-driven demand. SK Hynix reported it has already sold out all its chips for the upcoming year, indicating sustained high demand across the sector.
The surge in AI-related chip requirements is compressing supply for older technologies. According to Kim, this trend is affecting memory available for mobile phones and personal computers, and “the supply limitations are expected to persist into next year.”
Stock Performance Reflects Positive Sentiment
Following the earnings release, Samsung shares climbed as much as 5.3%, outperforming the 0.9% rise in the KOSPI benchmark index (.KS11). This price movement reflects investor confidence in the company’s strategy to capitalize on the AI-driven memory chip boom.
Factors Driving the Turnaround
Several elements contribute to Samsung’s recent performance:
- Rising AI Demand: The expansion of data centers and AI infrastructure is increasing the need for high-end memory solutions.
- Supply Constraints: A shift toward advanced AI chip production has tightened supply for conventional memory chips, leading to higher prices.
- Strategic Investments: Samsung plans to boost capital spending and production capacity, aiming to capture the growing market for HBM and other AI-focused memory chips.
The combination of these factors has created a favorable environment for Samsung’s memory business, allowing the company to outperform previous quarters when it struggled to keep pace with competitors in the AI space.
Implications for the Tech Industry
The surge in demand for memory chips is not isolated to Samsung. It reflects a broader industry trend: as AI workloads increase, manufacturers are prioritizing high-performance components over traditional devices. This dynamic is shaping global supply chains, creating a competitive landscape where production decisions directly impact pricing and availability.
Kim emphasized the long-term perspective, noting that while the company is expanding capacity, “customers’ demand will likely remain higher than our supply for the foreseeable future.” This signals continued pressure on supply and potential price volatility, particularly for AI-centric memory products.
Samsung’s focus on high-end memory chips, including HBM, positions the company to benefit from the AI infrastructure boom. While conventional markets such as mobile phones and PCs face supply constraints, AI-driven demand is providing a strong growth engine for the company’s primary cash cow: the memory business.
Analysts note that the current momentum, fueled by strong sales, rising prices, and strategic capital expenditure, could reshape memory chip dynamics across the industry. Samsung’s actions reflect a proactive approach to capturing AI-driven growth, while navigating supply limitations in traditional markets.
