Samsung set for huge Q4 profit on AI chip demand
Samsung Electronics (005930.KS) is expected to report a 160% rise in fourth-quarter operating profit, driven largely by a severe chip shortage that has sharply increased memory prices.
The surge comes as customers rush to secure components amid booming demand for artificial intelligence (AI) applications, News.Az reports, citing Reuters.
Semiconductor prices have soared in recent months as the industry shifts production toward AI-related chips, limiting supply of traditional memory. At the same time, demand has been growing rapidly for both conventional and advanced chips needed to train and operate AI models.
Samsung is likely to estimate an operating profit of 16.9 trillion won ($11.7 billion) for the October to December period, according to LSEG SmartEstimate from 31 analysts, which is weighted toward those who are more consistently accurate.
This compares with 6.49 trillion won from a year earlier and would mark the highest quarterly profit since the third quarter of 2018, which was a record high of 17.6 trillion won.
Some analysts have in recent weeks 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 world's top memory chip maker is set to release its estimates for revenue and operating profit on Thursday.
Prices for a type of DDR5 DRAM chip jumped 314% in the fourth quarter from a year earlier, according to data from market researcher TrendForce.
It expects conventional DRAM contract prices to rise 55% to 60% in the current quarter, from the October to December period.
"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," TrendForce analyst Avril Wu said.
DRAM chips are used in servers, computers and smartphones to temporarily store data and help run programs and applications smoothly and swiftly. DDR5 DRAM, a conventional chip, is faster and more efficient than its predecessor.
In December, Micron Technology forecast second-quarter adjusted profit at nearly double Wall Street estimates. Micron CEO Sanjay Mehrotra said he expects memory markets to remain tight past 2026 and that in the medium term, it expects to meet only half to two-thirds of demand from several key customers.
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