Samsung’s AI Memory Boom Lifts Profit, but Supply Outlook and Returns Disappoint

Samsung Electronics’ latest results show how strongly artificial intelligence demand is lifting memory earnings—and why that growth has not settled questions about how long it will last. The company reported 107.4 trillion won in operating profit for July to September, while its semiconductor division contributed 106.5 trillion won. Shares fell as much as 6.2 per cent after opening higher, as the company’s view of the supply crunch sounded less bullish than SK Hynix’s and a new shareholder return policy remained pending.

The market reaction reflected a comparison as much as the headline profit. Samsung’s semiconductor operating profit rose sharply from a year earlier but came in slightly below analysts’ estimate of 107.3 trillion won, according to LSEG. SK Hynix, by contrast, had reported better-than-expected earnings a day earlier, paired with a stronger supply outlook and plans to return about US$75 billion to shareholders in 2026. Its shares rose 0.7 per cent while Samsung’s declined.

“SK Hynix did quite a lot more than expected yesterday ... it went beyond market expectations, but Samsung Electronics hasn’t really changed anything from the guidance it gave before,” said Lee Min-hee, an analyst at BNK Investment & Securities.

The distinction matters because both companies are exposed to a market where high-bandwidth memory (HBM)—used in AI data centres—is in heavy demand. SK Hynix said its dynamic random-access memory and HBM chips were sold out through 2029, and that the shortage could persist to 2030. Samsung said its HBM supply was sold out for 2027, with key customers asking for more, but described a tighter market lasting through 2028. That is a substantial demand signal, though its stated horizon is shorter than SK Hynix’s.

Samsung expects AI infrastructure spending to reach a historic level in 2027 as the ecosystem expands. It also said AI-driven demand would “far exceed the industry supply in comparison with 2026.” The company’s caution about how long the gap will persist points to a practical constraint: adding fabrication capacity takes time, even as chipmakers increase spending. Samsung’s chip division capital expenditure rose 62 per cent to 76.8 trillion won in 2026, and the company expects a sharp increase in 2027.

Returns decision leaves a near-term question

Samsung’s profit surge did not bring a new commitment on capital returns. The company had said its 2026 shareholder returns would total between 90 trillion and 110 trillion won, including 30 trillion won in third-quarter dividends. It said it would finalise its next return policy in January. That timing appeared to disappoint shareholders who had expected an additional buyback or dividend announcement alongside the results.

“The market appeared to expect an additional buyback and/or dividend announcement, but the company deferred the decision until late January, potentially disappointing near-term expectations,” said Sanjeev Rana, a senior analyst at CLSA.

That leaves two distinct issues for shareholders to track: whether Samsung’s earnings can sustain their pace as AI infrastructure spending grows, and what framework the company sets for distributions after January. A high current profit does not resolve either question by itself. Memory prices are still rising, but their gains are slowing as chipmakers sign longer supply contracts and higher costs weigh on demand from smartphone and personal computer makers.

Longer contracts widen the customer base

Samsung said it has signed long-term supply agreements with 10 major customers and is in discussions with another 10. It aims for these contracts to cover 60 to 70 per cent of total production capacity by 2030. The company is seeking customers beyond AI-focused hyperscalers, including businesses in mobile and automotive markets.

Long-term agreements can give chipmakers more visibility into demand and production planning. They can also make it harder to adjust quickly if customers need less capacity, or if prices and demand change. Samsung’s target therefore signals a shift in how it wants to sell output, while leaving the eventual volume and financial terms of those agreements unspecified.

The foundry business remains another pressure point. Analysts said it was still loss-making, weighing on the semiconductor division’s earnings. Samsung, however, reported improved foundry revenue from logic dies used in HBM and new orders for advanced two-nanometre chips from hyperscalers and other AI customers. It plans to begin mass production at its Taylor, Texas, plant in 2027, making chips for Tesla, and is considering another fabrication plant to serve demand for two-nanometre products.

Outside the chip division, higher memory costs squeezed margins in Samsung’s mobile business, which recorded a loss of 800 billion won. This shows how the same price increases that support memory earnings can raise costs for other parts of the company.

AI demand is keeping Samsung’s capacity and customer pipeline in focus, but the results also expose the limits of a single strong quarter as a guide to what comes next. The duration of the supply gap, the pace of price increases, execution at new facilities and the January returns decision will shape how shareholders assess the earnings surge.