(April 30): Samsung Electronics Co’s semiconductor arm brought in historic profit over the March quarter, beating expectations with a 48-fold jump as artificial intelligence (AI) data centre orders delivered hefty margins.
The chipmaking unit, which competes with SK Hynix Inc and US-based Micron Technology Inc in memory, reported an operating income of 53.7 trillion won (US$36 billion or $46.4 billion) in the first quarter. The result compares with the average analyst estimate of 35.3 trillion won. Group-wide net income rose to 47.1 trillion won.
The results reflect massive spending by hyperscalers, with both Meta Platforms Inc and Alphabet Inc planning to plough even bigger sums into AI infrastructure. That’s spurring some investors to bet that high-bandwidth memory (HBM) — one of the key bottlenecks to AI’s rise — is no longer beholden to boom-and-bust cycles and can tap sustained growth.
“The more relevant question is duration: How long does HBM4 pricing power hold, and is AI infrastructure spending durable?” said Dave Mazza, the chief executive officer of Roundhill Investments. “Absent a material deceleration in hyperscaler capex, the earnings runway supports current multiples.”
Samsung is “substantially” increasing its own capital spending this year, the company said on a conference call to discuss its earnings, without elaborating. It is on track to provide samples of HBM4e, the next generation of its most advanced chips for AI use, in the current quarter — ahead of SK Hynix’s roadmap for the latter half of the year. Samsung also sees the surging margins for conventional memory narrowing the gap to HBM in 2027.
The company currently has very limited inventory and available supply is “far short of customer demand”, an executive said on its call. Samsung’s demand-fulfillment rate is now at a record low and the supply-demand gap is likely to further widen next year, according to its management.
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Accelerators such as those made by Nvidia Corp are limited by the speed and capacity of memory to supply data, making DRAM a key factor in determining the quality of AI services. Cloud providers are shouldering higher memory prices, giving rise to the theory of a memory supercycle and helped Samsung’s shares climb about 88% this year after more than doubling in 2025.
That argument faces persistent concerns about whether the pace of AI spending is sustainable. Meta shares sank overnight on fears that the hundreds of billions of dollars committed to AI won’t pay off. Earlier this week, stocks linked to OpenAI slumped after it reportedly failed to meet sales and user targets, rekindling doubts AI will deliver sufficient profits anytime soon.
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Still, analysts expect Samsung’s chip division to build on its record-breaking profit over the next several quarters as contract prices continue their steep upward trajectory amid limited supply. They point to a more than 180% rise in Korea’s semiconductor exports during the first 20 days of April as a sign of continued momentum for both Samsung and SK Hynix.
Counterpoint Research expects a 60% quarter-on-quarter rise in average DRAM contract prices in the April-June period, analyst Tom Kang said. Average contract prices for DRAM rose 42% in March from February, according to the research firm’s monthly memory price tracker.
Samsung — the world’s largest memory maker — is considering a shift toward multiyear contracts with the aim to stabilise supply and ease concerns about shortages, co-CEO Jun Young-hyun told shareholders at an annual general meeting last month. Such a move would further bolster prices and provide a buffer against cyclical downturns.
The chip unit’s profit growth contrasts with declines in Samsung’s mobile and displays operations, which are fighting rising materials and components prices.
The profits generated by the AI boom are also prompting Samsung employees to demand a bigger share, with workers threatening an 18-day general strike in May. Last week, more than 30,000 workers gathered outside Samsung’s main chip hub in Korea’s southern city of Pyeongtaek.
Analysts are divided on whether a prolonged stoppage would materially dent chip output or simply create short-term volatility, since Samsung’s operations are highly automated.
“A strike could exacerbate the memory shortage further, potentially driving prices even higher,” said Greg Roh, an analyst with Hyundai Motor Securities Co. “The bigger worry may be customer confidence, as any sense of instability could be damaging.”
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