Samsung Electronics is heading toward what could be another record quarter, with analysts expecting its third-quarter operating profit to rise almost nine-fold as the global AI buildout keeps demand for memory chips exceptionally strong.
But the scale of the expected profit jump hides a more complicated story. According to Reuters, analysts have cut their forecasts by 7.7% since the end of August as memory-price growth slows and the South Korean won strengthens. Samsung’s semiconductor margins may be approaching a plateau even while demand remains strong.
The market is therefore watching two numbers at once: how much profit Samsung generates from the AI-driven memory shortage, and whether the extraordinary pricing power behind that profit can continue.
The AI boom is turning memory into Samsung’s profit engine
Samsung is expected to report operating profit of about 106.1 trillion won, or roughly $79.1 billion, for the July-to-September period, according to the LSEG SmartEstimate cited by Reuters. That would compare with 12.17 trillion won a year earlier and mark a fourth consecutive quarter of record operating profit.
The primary driver is the memory business. AI data centers require enormous quantities of DRAM, high-bandwidth memory and enterprise storage, and demand has remained ahead of supply growth.
Samsung itself said after its second-quarter results that its memory business had achieved record quarterly revenue and operating profit, with server products becoming an increasingly important part of the sales mix. The company expected strong second-half demand for server DRAM, enterprise SSDs and HBM as AI infrastructure investment continued.
The result is a memory market that remains undersupplied even as some parts of the consumer electronics market are softer.
Record profit does not mean pricing power is still accelerating
The key change in the third quarter was the pace of memory-price growth.
TrendForce expects conventional DRAM contract prices to rise about 10% to 15% in the fourth quarter from the previous quarter. That would be a significant slowdown from the roughly 60% increase seen in the second quarter.
That moderation matters because semiconductor profitability can change rapidly when supply catches up with demand. Samsung’s memory-chip operating profit margin is expected to remain around 76% in the third quarter, according to an estimate from SK Securities cited by Reuters.
In other words, Samsung can still generate extraordinary profits without margins continuing to expand. The concern for investors is what happens if the current shortage eventually eases and memory prices stop rising altogether.
Long-term contracts are changing how the memory cycle works
Chipmakers are also responding differently to the shortage than they did during previous memory cycles.
Samsung said in July that it wanted long-term contracts to cover about two-thirds of its memory output. Such agreements can provide customers with supply certainty and give manufacturers more predictable revenue, but they can also limit how quickly prices rise when spot-market conditions become exceptionally tight.
TrendForce has pointed to this growing use of long-term contracts as one reason memory-price increases are slowing. Suppliers are also conscious that extremely high component prices eventually feed into smartphones, PCs and other electronics, potentially weakening demand.
This creates a delicate balance for Samsung and its competitors. They need to capture the extraordinary economics of today’s AI demand without pricing the broader electronics ecosystem out of the market.
HBM is where the next battle is being fought
The more strategically important part of Samsung’s memory business is high-bandwidth memory, or HBM. These specialized memory stacks sit alongside AI accelerators and are critical to the performance of modern data-center systems.
Samsung had fallen behind SK Hynix in HBM after delays in qualifying some products for Nvidia. Reuters reports that the company has been gaining ground this year through increased shipments of its latest HBM4 products.
J.P. Morgan estimates Samsung’s share of the HBM market could rise to 34% this year from 20% last year, while SK Hynix’s share could decline to 46% from 60%.
That would be an important shift. Conventional DRAM remains a huge source of profit, but HBM is strategically tied to the expansion of AI accelerators. Winning more HBM business means Samsung can capture more of the value created by the AI infrastructure boom rather than relying only on conventional memory demand.
Samsung’s own second-quarter update also pointed to this direction, saying it was expanding HBM4 sales while shipping HBM4E samples to major customers and preparing for continued AI infrastructure investment.
A stronger won is another drag on reported earnings
Samsung is also facing a currency problem at exactly the moment when its semiconductor business is producing enormous overseas revenue.
The South Korean won strengthened 14.3% against the dollar during the third quarter, its largest quarterly gain since early 1998, according to Reuters. A stronger won reduces the value of overseas earnings when they are translated back into the Korean currency.
That means the underlying demand for Samsung’s chips can remain strong while the company’s reported earnings receive a currency-related hit. It is one reason analysts have become more cautious even though the headline profit forecast remains extraordinary.
Chinese memory makers are becoming another pressure point
Samsung also cannot assume that the current shortage will protect its market position indefinitely.
Chinese memory manufacturers remain concentrated in lower-end products, but they are benefiting from the unusually strong pricing environment. Industry checks cited by Reuters indicate that a growing number of original equipment manufacturers and original design manufacturers are adopting Chinese DRAM and NAND products.
For Samsung, that creates a longer-term competitive risk. If Chinese suppliers continue moving up the value chain while memory prices remain elevated, customers have more incentive to qualify alternative sources.
The impact is unlikely to be immediate across Samsung’s highest-end AI products, where technology qualification and reliability requirements are demanding. But it could gradually increase pricing pressure in conventional memory and storage markets.
The AI memory shortage may last, but the supercycle is changing
The unusual feature of this cycle is that supply constraints are not expected to disappear quickly. Chipmakers expect the memory shortage that began more than a year ago to continue into next year and potentially through 2028, as AI infrastructure absorbs an increasing share of global capacity.
Micron has similarly warned that the market could be tighter in 2027 and 2028 than this year. Samsung expects demand for server memory, HBM and enterprise SSDs to remain strong as AI infrastructure and agentic AI deployments expand.
Yet a prolonged shortage does not necessarily mean endlessly rising profits. Once prices reach levels that encourage customers to sign long-term contracts, manufacturers to add capacity and competitors to enter the market, the economics begin to stabilize.
That appears to be the stage Samsung is approaching. The company can still deliver record earnings while the rate of improvement in chip prices slows.
Samsung’s next test is turning AI demand into durable earnings
Samsung’s expected third-quarter result is therefore both a confirmation of the AI boom and an early warning about its next phase.
The company has regained momentum in HBM, remains one of the world’s dominant conventional-memory suppliers and is benefiting from a shortage that may persist for years. But investors are now looking beyond the size of the quarterly profit.
They want to know how much of that profit is structural, how much depends on extraordinary memory pricing, whether Samsung can continue closing the HBM gap with SK Hynix, and how quickly Chinese competitors can move into higher-value products.
If AI infrastructure spending remains strong while Samsung continues gaining HBM share, the company could convert today’s memory shortage into a much more durable earnings base. If memory prices flatten and competition intensifies, the nine-fold profit increase could prove to be the peak of a cycle rather than the beginning of a new normal.
Sources: Reuters, Samsung Semiconductor.
