AI Chip Boom Propels Samsung Profits by 1,800%

South Korean technology giant Samsung Electronics anticipates a record surge of approximately 1,800% in its operating profit for the second quarter of 2026 (April-June) compared to the same period last year, fueled by an unprecedented increase in demand for artificial intelligence (AI) chips. According to the company's regulatory filings, operating profit is expected to reach 89.4 trillion Korean won (approximately $58.44 billion) during this period, highlighting the robust demand for AI-focused products in the global semiconductor market.

This remarkable profit growth marks Samsung's third consecutive quarter of reporting record operating profit. A prolonged memory chip shortage in the semiconductor industry has deepened as booming demand for AI inference infrastructure continues to outpace supply growth from global memory manufacturers. Demand for High-Bandwidth Memory (HBM) chips, as well as conventional DRAM and NAND products, has strengthened as AI applications expand into a broader range of computing workloads. Notably, agentic AI systems, which perform more complex, multi-step tasks, require additional memory for server processors and greater storage capacity to retain and retrieve data during inference, thereby boosting memory demand.

According to data from Citigroup analysts, average selling prices for DRAM rose by 44% quarter-on-quarter in the second quarter, while NAND prices increased by 53%. These price hikes directly contributed to Samsung's financial performance, given its position as a key supplier of memory chips to major technology companies including Nvidia, Google, and Apple. However, Samsung also agreed in May to allocate 10.5% of its semiconductor division's operating profit to performance bonuses for employees as part of a wage deal. These bonus provisions, despite the optimistic profit forecasts, could impact the company's net profit, with analysts suggesting that operating profit might have exceeded 100 trillion won without these provisions.

The memory market is expected to remain undersupplied at least through next year, with some analysts predicting this situation could extend into 2027. This scenario has led to a massive rally in the share valuations of memory chipmakers such as Samsung Electronics, SK Hynix, and Micron, driving all three companies' market capitalizations above $1 trillion. Nevertheless, rising memory chip prices are also putting pressure on Samsung's mobile division; increased component costs are squeezing margins, and the company may be forced to further raise smartphone prices in the second half of the year.

The expansion of AI workloads and the growing memory requirements of traditional servers and storage platforms are exacerbating the supply-demand imbalance in the market. Furthermore, some customers are seeking longer-term supply agreements, signaling potentially more stable pricing. However, ongoing volatility related to macroeconomic trends and geopolitical issues continues to create uncertainty in the market.

Analysts anticipate that Samsung will maintain this positive momentum in the coming period. Nomura's report projects a 24% quarter-on-quarter increase in commodity DRAM prices and a 25% increase in NAND prices for the third quarter. Still, a potential slowdown in AI infrastructure investments is considered the biggest risk factor for the current memory boom. Samsung is set to release its detailed financial results later in July, and markets eagerly await further insights into the performance of its various business divisions.