Samsung expects biggest quarterly profit in over three years

The world’s leading memory chipmaker estimated an operating profit of 12.1 trillion won ($8.5 billion) for the July-September period, up 32% from a year earlier

Samsung Electronics on Tuesday said it expects its biggest quarterly profit in over three years, as the global race to boost production of AI chips has tightened supply and driven up prices of conventional memory chips, the tech giant’s mainstay.

Strong demand for conventional memory chips used in data centre servers helped offset weaker sales of advanced artificial intelligence chips of Samsung, which has been lagging rivals in the race to supply to Nvidia, analysts said.

The world’s leading memory chipmaker estimated an operating profit of 12.1 trillion won ($8.5 billion) for the July-September period, up 32% from a year earlier. That would mark its best quarterly profit in 13 quarters.

Samsung shares slid 0.5% as of 0302 GMT after rising 2.9% earlier to their highest level since January 2021. Analysts attributed the decline to profit-taking following the rally. The stock has gained nearly 75% this year.

The third-quarter earnings surprise came from the chip business, said Ryu Young-ho, a senior analyst at NH Investment & Securities.

Strong demand for conventional memory to support general-purpose servers, combined with robust HBM demand for AI servers, have together fuelled overall memory demand, he said.

Although progress in supplying advanced high bandwidth memory (HBM) chips to major clients such as Nvidia was slower than expected, gains in commodity memory, supported by tight supplies, helped cushion the impact, analysts said.

Samsung is a big beneficiary of growing demand for commodity chips, said Sohn In-joon, an analyst at Heungkuk Securities.

Sohn attributed the earnings beat to stronger-than-expected prices of commodity DRAM and NAND chips, stemming from demand for data centre servers, and lower chip inventory by chipmakers that gave them bargaining power in pricing.

Analysts said Samsung also benefited from narrower losses at its foundry unit, which makes logic chips, as utilisation rates helped ease fixed-cost pressures.