On Tuesday, the leading memory chipmaker globally by sales is expected to announce an operating profit of 86 trillion won ($56.35 billion) for the April to June quarter, as per an LSEG SmartEstimate that consolidates insights from 30 analysts, favoring those with the most accurate predictions.
This figure shows a significant increase from 4.7 trillion won a year prior and would mark the third consecutive quarter of record operating profit for Samsung, driven by an ongoing memory shortfall and surging demand for AI inference infrastructure that continues to exceed supply growth from worldwide memory producers.
Analysts predict that the memory market will remain in a state of undersupply at least through the upcoming year.
The impressive growth has been fueled not just by high-bandwidth memory (HBM), but also by robust demand for DRAM and NAND products as AI applications, particularly agentic AI, broaden into various computational tasks.
In contrast to previous AI applications that primarily focused on training large models, agentic AI systems execute more intricate, multiphase tasks requiring additional memory for server processors and higher storage capacity to manage and retrieve data during inference, as per analysts.
Samsung remains a vital supplier of memory chips for major tech firms like Nvidia, Google, and Apple.
Citi Research noted on Thursday that average selling prices for DRAM and NAND saw increases of 44% and 53% quarter-on-quarter, respectively, in the second quarter.
The ongoing memory scarcity has triggered a significant surge in the shares of memory chip manufacturers, with Samsung Electronics, SK Hynix, and Micron witnessing increases of 158%, 273%, and 242%, respectively, this year, pushing all three companies’ market valuations above $1 trillion.
CHIP WORKERS’ BONUSES COULD DEFY FORECASTS
Despite the strong operational framework, analysts warned that second-quarter earnings might not meet expectations if Samsung records a larger-than-anticipated provision for employee bonuses during the quarter.
In late May, Samsung dodged a large-scale strike by reaching a wage agreement allocating 10.5% of the semiconductor division’s operating profit to special bonuses for chip employees. Some analysts speculate that Samsung’s total bonus provisions may surpass 40 trillion won, making the timing of accounting recognition a crucial factor for second-quarter earnings.
Samsung plans to disclose detailed earnings later this month.
RISKS TO WATCH
Looking ahead, analysts highlight potential delays in AI infrastructure investment as a significant risk to the ongoing memory boom.
JPMorgan indicated in a recent note that while investors widely acknowledge the memory supply-demand dynamics remain tight, many express doubts about the sustainability of AI memory’s rapidly growing share of capital expenditures among cloud service providers — estimated at 52% this year and projected to rise above 70% next year.
A decline in AI spending could negatively impact Samsung and SK Hynix, which last week committed to investing 3,200 trillion won ($2.07 trillion) to increase chip capacity in South Korea. Samsung plans to make that investment between 2026 and 2040, while SK Hynix has not provided a specific timeline.
Investors are seeking clearer indications that advancements in AI services will lead to accelerated growth in cloud computing and associated AI revenues, thereby justifying memory’s expanding proportion of AI infrastructure spending, according to JPMorgan.
The world’s leading memory chipmaker by sales stated in April it has signed multi-year binding contracts with clients aiming to secure supplies, though the identities and terms have not been disclosed.
Nomura recently reported that it expects commodity DRAM prices to climb 24% quarter-on-quarter and NAND prices to rise 25% in the July-September quarter, supported by increased demand for consumer memory products and chips for both traditional and AI data centers.
On the other hand, Samsung’s mobile segment is under pressure from rising costs, as escalating memory prices have diminished its margins, with increased component costs outweighing recent handset price hikes.
Although Samsung has already elevated smartphone prices, analysts suggest that additional price increases may be necessary in the latter half of the year. Competitor Apple raised prices of iPads and MacBooks last month.
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