Samsung Electronics is expected to post another record quarterly operating profit as artificial intelligence demand keeps the global memory-chip market in a prolonged supply squeeze, but the sharp slowdown in chip price increases is raising fresh questions about how long the semiconductor boom can sustain its current profitability.
The world’s largest memory-chip maker is expected to report operating profit of 106.1 trillion won ($79.1 billion) for the July-September quarter, according to LSEG’s SmartEstimate based on forecasts from 21 analysts. That would represent an almost ninefold increase from 12.17 trillion won a year earlier and mark Samsung’s fourth consecutive quarter of record operating profit.
Yet the headline number masks a deterioration in expectations. Analysts have cut their consensus forecast by 7.7% since the end of August, indicating that the market is becoming more cautious even as Samsung’s earnings remain far above last year’s levels.
Register for the next Tekedia Mini-MBA.
Register for Tekedia AI in Business Masterclass.
Join Tekedia Capital Syndicate and co-invest in great global startups.
The company will release preliminary third-quarter results on Thursday, with detailed results expected later in October.
The central driver remains the unprecedented demand for memory used in AI servers and data centers. The resulting shortage has persisted for more than a year, with chipmakers expecting tight supply conditions to continue into next year and potentially through 2028.
But the semiconductor cycle is entering a more complicated phase. Memory prices continued to rise in the third quarter, but at a much slower pace, prompting investors to question whether the extraordinary expansion in chip margins has reached its peak. That matters because Samsung, SK Hynix and Micron have benefited from a rare combination of strong AI demand, constrained supply and rapidly increasing memory prices. The companies have been able to raise prices while expanding margins, creating a powerful earnings cycle.
The question now is whether AI demand can remain strong enough to offset slower price growth, rising production costs, currency headwinds and increasing competition.
Memory Prices Lose Momentum
The clearest warning sign is the moderation in memory-price increases. TrendForce expects conventional DRAM contract prices to rise 10% to 15% in the fourth quarter from the previous quarter, a substantial slowdown from the roughly 60% increase recorded in the second quarter.
“Although the market remains in a tight supply position, the pace of price growth is expected to decelerate,” said Avril Wu, senior vice president for research at TrendForce.
Suppliers are becoming more cautious about pushing prices higher because excessive increases could begin to damage demand for smartphones, PCs and other consumer electronics. Memory has already become a more expensive component for manufacturers, increasing costs at a time when demand for some consumer products remains sensitive to pricing.
Long-term supply agreements are also changing the dynamics of the market.
Samsung said in July that it aimed to secure long-term contracts covering about two-thirds of its memory output. Such agreements give customers greater certainty over supply while giving Samsung more predictable demand, but they can also limit the speed at which suppliers can raise prices.
“With ceiling-price mechanisms built in, the rate of price increases has slowed down,” Wu said.
That shift could make the current memory cycle less explosive than previous booms. Rather than relying entirely on spot-market price increases, chipmakers are increasingly locking in volumes and prices through longer-term arrangements.
For Samsung, that provides greater earnings visibility but potentially reduces the upside from another sharp spike in memory prices.
The industry is still far from a normal supply environment. Micron has said the memory market could be even tighter in 2027 and 2028 than this year. The issue, therefore, is not whether demand has collapsed. It is whether supply constraints remain severe enough to support exceptionally high margins as production expands.
Samsung’s memory-chip operating margin is expected to reach 76% in the third quarter, according to SK Securities analyst Han Dong-hee, unchanged from the previous quarter.
HBM Becomes Samsung’s Critical Battleground
While conventional memory remains central to Samsung’s earnings, the more important strategic battle is taking place in high-bandwidth memory, or HBM, which is essential for the high-performance processors used in AI data centers.
Samsung had fallen behind SK Hynix in HBM after delays in qualifying its products for Nvidia, leaving SK Hynix with a dominant position during the early stages of the AI infrastructure boom.
Samsung has been working to close that gap and has expanded shipments of its latest HBM4 products this year. J.P. Morgan estimates Samsung’s share of the HBM market will rise to 34% this year from 20% last year. SK Hynix’s share is expected to fall to 46% from 60%.
HBM is one of the fastest-growing areas of the memory market and carries much greater strategic significance for AI infrastructure than conventional DRAM.
Therefore, Samsung’s ability to gain HBM share is expected to help compensate for slower growth in conventional memory prices. It also gives the company a stronger position in a market where demand is being driven by the expansion of AI computing rather than traditional consumer electronics.
But Samsung is not operating in a vacuum. SK Hynix remains the market leader, while Micron is also expanding its HBM business. The competition is increasingly about securing qualification from major AI-chip designers and ensuring sufficient production capacity.
China and Currency Create Additional Pressure
Samsung also faces a growing competitive challenge from Chinese memory manufacturers. Chinese companies remain more concentrated in lower-end memory products, but they are using the current global shortage to increase their presence among customers.
“Our industry checks indicate that an increasing number of OEMs and ODMs are adopting Chinese DRAM and NAND,” Kinngai Chan, senior research analyst at Summit Insights Group, said in a report.
The development creates a longer-term risk for Samsung. If Chinese producers continue moving into higher-value memory products, global supply could eventually increase more rapidly and place greater pressure on prices.
Currency movements are creating another headwind.
The South Korean won strengthened 14.3% against the dollar in the third quarter, its largest quarterly gain since early 1998. For Samsung, which generates substantial revenue overseas, a stronger won reduces the value of foreign earnings when converted into the local currency. That means even strong dollar-denominated sales can translate into weaker reported earnings growth in won terms.
The currency effect comes at a sensitive point for Samsung because its shares have already fallen about 25% from their June record, although they remain more than twice their level at the start of the year.
The AI Boom is Still Powerful, But Expectations Are Changing
Samsung’s upcoming results are therefore likely to show two different stories. The first is the extraordinary strength of the current semiconductor cycle. A projected 106.1 trillion won operating profit would represent an almost ninefold increase from a year earlier and demonstrate how dramatically AI infrastructure spending has transformed the memory market. The second is the beginning of a debate over the sustainability of those earnings.
Analysts have already reduced their estimates even as the company remains on track for another record quarter. Memory-price growth is slowing, long-term contracts are limiting pricing power, the won has strengthened sharply, consumer electronics manufacturers are absorbing higher component costs, and Chinese competitors are expanding.
At the same time, Samsung has a potentially significant source of additional growth in HBM. Its expected increase in market share would strengthen the company’s position in the AI supply chain and reduce its dependence on conventional memory pricing.
The critical question is whether HBM growth can compensate for a cooling price cycle elsewhere in memory.
While demand currently remains strong enough to keep the industry in a shortage, the market is moving from a phase in which almost every major variable was working in Samsung’s favor toward one where earnings will depend on product mix, customer contracts, manufacturing efficiency and market share.
Analysts say that backdrop makes Samsung’s next results important not simply because of the size of the expected profit increase, but because they will provide a clearer indication of whether the AI-driven memory boom is still accelerating or entering a more mature phase.