Key Takeaways
- Samsung Electronics is expected to flag a 160% jump in its fourth-quarter operating profit due to a severe chip shortage and booming demand for artificial intelligence.
- The company’s operating profit is estimated to be 16.9 trillion won ($11.7 billion) for the October to December period, according to LSEG SmartEstimate from 31 analysts.
- Some analysts have raised their estimates for Samsung’s fourth-quarter operating profit to more than 20 trillion won on the back of stronger-than-expected prices of traditional chips.
- The global shortage of memory chips is a boon to Samsung’s mainstay semiconductor business, but soaring chip prices are squeezing margins in its smartphone division.
Introduction to Samsung’s Expected Operating Profit
Samsung Electronics is expected to announce a significant increase in its fourth-quarter operating profit, with estimates suggesting a 160% jump compared to the same period last year. This is largely due to a severe chip shortage that has driven up memory prices, as customers scramble to meet booming demand for artificial intelligence. As reported by Reuters, "Samsung Electronics (005930.KS) is expected to flag a 160% jump in its fourth-quarter operating profit spurred by a severe chip shortage that has sharply driven up memory prices as customers scramble to meet booming demand for artificial intelligence."
The Impact of Chip Shortage on Samsung’s Profit
The industry’s shift to AI-related chips has curbed production for traditional memory, while demand has been surging for both conventional and advanced chips to train and run AI models. This has resulted in a significant increase in semiconductor prices, with prices for a type of DDR5 DRAM chip jumping 314% in the fourth quarter from a year earlier, according to data from market researcher TrendForce. As TrendForce analyst Avril Wu said, "As conventional DRAM prices continue to surge, Samsung – whose production capacity is largely concentrated in this segment – stands to gain relatively more from the current price upcycle."
Samsung’s Progress in Supplying Chips to Nvidia
Samsung’s booming profit marks a dramatic turnaround, just over a year after CEO Jun Young-hyun apologised for the company’s disappointing earnings and performance as it lagged its cross-town rival SK Hynix in supplying high-end chips to Nvidia, the dominant maker of AI processors. However, Samsung is making progress in supplying chips to Nvidia, potentially gaining share against SK Hynix and Micron. As Jun said on Friday, "Samsung customers have praised the competitive edge of its next-generation high-bandwidth memory (HBM) chips, or HBM4, quoting them as saying, ‘Samsung is back,’ which helped extend a rally in Samsung’s shares to record highs in recent sessions."
The Expected Impact on Samsung’s Mobile Business
While the global shortage of memory chips is a boon to Samsung’s mainstay semiconductor business, soaring chip prices are squeezing margins in its smartphone division, its second-largest revenue source. As Samsung co-CEO TM Roh, who oversees Samsung’s mobile, TV and home appliance businesses, told Reuters, "As this situation is unprecedented, no company is immune to its impact… We are trying to minimise the impact, which looks ‘inevitable’." Analysts are also wary of Samsung’s valuations, as surging chip prices may sap demand for PCs and smartphones, and cited "risks of a demand slowdown" for AI data centres increasingly relying on debt to finance investments.
Conclusion and Expected Operating Profit
In conclusion, Samsung Electronics is expected to announce a significant increase in its fourth-quarter operating profit, driven by a severe chip shortage and booming demand for artificial intelligence. The company’s operating profit is estimated to be 16.9 trillion won ($11.7 billion) for the October to December period, according to LSEG SmartEstimate from 31 analysts. While the global shortage of memory chips is a boon to Samsung’s mainstay semiconductor business, soaring chip prices are squeezing margins in its smartphone division. As reported by Reuters, "Analysts said Samsung’s operating profit is expected to more than double this year to over 200 trillion won as the chip price rally would more than offset slowing profit for its mobile business."
https://www.reuters.com/world/asia-pacific/samsung-likely-flag-160-jump-q4-profit-ai-boom-stokes-chip-prices-2026-01-06/