Samsung says chip crunch will last until 2028 as quarterly profit soars

Samsung Electronics extended its record run with second-quarter operating profit topping analysts' estimates, as robust artificial intelligence demand continues to drive growth in its memory chip business.

Here are Samsung's first-quarter results compared with LSEG SmartEstimates, which are weighted toward forecasts from analysts who are more consistently accurate:

Samsung shares reversed course to close 0.72% lower on Thursday.  

The South Korean tech giant posted a record quarterly operating profit, up 1,814% year on year, while revenue rose 130%. Profit jumped over 56% from the previous quarter, while revenue climbed more than 28%.

Both operating profit and revenue were in line with Samsung's forecast released earlier this month.

The company cited AI server demand as the key driver for its record-breaking memory earnings, which helped its achieve all-time high DRAM and NAND sales. Those chips are used in a wide range of electronic devices, from smartphones to automotive systems and servers.

Samsung also said memory capex increased quarter over quarter as it expanded investment in new fab in Pyeongtaek and other infrastructure projects to meet AI demand, while continuing to invest in advanced R&D.

The company said it scaled up HBM4 sales and shipped the industry's first HBM4E samples to major customers. HBM4 is Samsung's sixth-generation high-bandwidth memory designed to power advanced artificial intelligence processors, including Nvidia's Vera Rubin Platform.

Samsung said it was seeing exponential growth in demand for general-purpose computing alongside AI, and was closely monitoring the relative pace of demand for HBM and server DRAM while maintaining an optimal product mix to support long-term AI demand.

The company expects industry supply constraints to persist next year and said it will manage its HBM and DRAM businesses in a balanced manner to achieve an HBM market share in line with its conventional DRAM business.

For the second half of the year, the company expects robust demand for memory centered on servers and continuing AI infrastructure capex amid a broader adoption of agentic AI.

"The AI infrastructure buildout is still paying its suppliers handsomely, and Samsung expects more to come, pointing to strong memory demand in the second half as agentic AI adds another layer of appetite for its chips," said Josh Gilbert, lead analyst for APAC at eToro. 

It also expects to see accelerating demand for server DRAM, eSSDs, and HBM. Enterprise SSDs are high-performance storage devices designed to deliver data quickly and are essential to AI infrastructure. 

Samsung said it expects supply constraints to tighten further in 2027, with rapidly growing AI token generation driving exponential demand over the medium to long term. The company said more customers are seeking multi-year supply agreements to secure AI infrastructure capacity, giving Samsung a better visibility into future demand and greater flexibility in planning investments. 

The South Korean tech giant added it has finalized agreements with top five global data center customers and is in the final stages of talks with five additional major accounts to support their AI related demand.

Regarding the possibility of a U.S. listing, Samsung said it is "not currently reviewing an ADR issuance," despite recent media reports. The company added that, from a mid to long-term shareholder value perspective, an ADR remains "one of several possible options that could be open for consideration." 

Samsung last week unveiled its latest product lineup featuring new foldable smartphones, alongside an announcement of an expanded strategic collaboration with Broadcom across memory and foundry technologies.

"The strength of the memory business is remarkable, but so is Samsung's dependence on it," Gilbert said, pointing to the mobile and networks business swinging to a 700 billion won loss, squeezed by the very component prices driving the semiconductor boom.

The company cited elevated component cost pressures for the decline, although revenue grew year on year on solid sales of the Galaxy S26 series and strong momentum for the Galaxy A series.

The company recently set up its robotics division under the direct oversight of the CEO, and said it views robotics, alongside AI, as a key growth area and is exploring collaborations with startups, as well as potential investments in M&As, to accelerate its strategy.

Samsung's domestic rival SK Hynix reported another record second-quarter profit on Wednesday, though it missed analysts' estimates.