Samsung reports more than 250-fold jump in chip profit

The bullish outlook from the world’s largest memory chip maker nevertheless failed to ease investor concerns about technology firms’ hefty AI infrastructure spending curbing growth

Samsung Electronics on Thursday reported a more than 250-fold jump in chip profit and announced multiyear supply deals with major data centre operators, saying it expects international chip shortages to become more acute and extend into 2028.

The bullish outlook from the world’s largest memory chip maker nevertheless failed to ease investor concerns about technology firms’ hefty AI infrastructure spending curbing growth.

The company’s net profit for the quarter ended June 30 jumped to 71.27 trillion won ($49.2 billion). Operating profit surged to 89.4 trillion won, up 19-fold from a year earlier and in line with the company’s previously issued guidance.

The chip narrative has weakened. Investors are questioning how long their record-high margins will be sustainable, said market analyst Kim Seok-hwan at Mirae Asset Securities, after Samsung’s chip unit booked a record 70 per cent operating profit margin.

The South Korean conglomerate has signed supply agreements with the world’s five biggest data centre firms and is nearing deals with five other major players, it said without identifying them. Almost all customers are requesting multi-year supply contracts, Jaejune Kim, executive vice president of Samsung’s memory business, told analysts on an earnings call.

Samsung aims to secure contracts covering about two-thirds of its memory output over the longer term, Kim said. They will last at least five years and typically include upfront payments and floor pricing aimed at hedging the risk of capital investment, Kim said.

However, surging chip prices hurt Samsung’s mobile division, which reported its first quarter in the red with a 700 billion won loss.