Samsung Electronics appears to be heading for another record quarter. Strong demand for memory chips used in AI applications continues to outpace available supply, causing prices to rise further and leading to a sharp increase in the South Korean chipmaker’s profits.
On Tuesday, Samsung will release a preliminary profit forecast for the second quarter. According to data from LSEG, analysts are projecting an operating profit of approximately 86 trillion won (about $56 billion), nearly eighteen times as much as a year earlier. Reuters expects the company to post record profits for the third consecutive quarter.
The main driver remains global demand for AI infrastructure. Not only are specialized HBM memory chips in short supply, but demand for standard DRAM and NAND memory is also growing rapidly. Organizations are adopting AI on an increasingly broad scale, which means that traditional servers and storage platforms also require more memory.
Agentic AI increases memory demand
The rise of agentic AI plays a key role in this. Whereas earlier generations of AI focused primarily on training large language models, AI agents independently perform complete tasks and workflows. During inference, this requires more working memory and additional storage capacity for processing and retrieving data.
According to Citigroup analysts, average selling prices for DRAM memory rose by 44 percent in the second quarter compared to the previous three months. For NAND, the price increase was as high as 53 percent. Analysts expect the current shortages in the memory market to persist through 2027.
Despite the favorable market conditions, there is uncertainty regarding the final quarterly profit. At the end of May, Samsung signed a new collective bargaining agreement with employees of its chip division, under which 10.5 percent of operating profit will be allocated to performance bonuses.
Depending on when Samsung recognizes these obligations in its financial statements, this could have a noticeable effect on the reported results. Some analysts are factoring in bonus provisions that could amount to more than 40 trillion won. The full quarterly results will be released later this month.
Doubts about the pace of AI investments
Looking further ahead, attention is shifting to investments in AI infrastructure. As long as hyperscalers continue to build new AI capacity, demand for memory chips will remain high. However, several analysts point out that these investments may eventually level off.
According to a recent analysis by JPMorgan Chase, investors are wondering whether cloud providers will continue to allocate an increasingly large portion of their investment budgets to AI hardware in the coming years. This year, more than half of their capital expenditures are expected to go toward AI, a share that could rise further next year.
That risk is relevant for Samsung and SK Hynix, which last week jointly announced investments of approximately 3,200 trillion won to expand chip production in South Korea. Samsung is spreading that program out over the period through 2040.
Mobile division feels the impact of higher chip prices
The strong demand for memory chips also has a downside for Samsung itself. Its smartphone division is now paying significantly more for memory components, putting pressure on margins.
Although Samsung has already raised the prices of several smartphones, analysts believe further price increases are likely later this year. Rival Apple also recently raised the prices of various hardware products.
The market for memory chips is expected to remain tight for the time being, as long as AI workloads continue to grow and new production capacity becomes available only gradually.