Samsung Electronics expects global chip shortages to become more acute and extend into 2028, according to the company's latest earnings announcement.

89.2 trillion won

Samsung's semiconductor unit operating profit in the second quarter, a more than 250-fold increase year-over-year.

Samsung's semiconductor unit reported an operating profit of 89.2 trillion won ($61.7 billion) in the second quarter, a more than 250-fold increase from the previous year. The company's total group operating profit rose to 89.5 trillion won, meeting earlier estimates, while overall revenue increased by 130% to 171.5 trillion won. Its mobile division, however, posted a loss of 700 billion won.

The chip unit recorded a 70% operating profit margin, underscoring the strength of memory chip pricing. Samsung manufactures and supplies roughly one-third of the world's memory chips, positioning it at the center of the shortage.

Almost all customers are requesting multi-year supply contracts.
— Jaejune Kim, executive vice president of Samsung's memory business

Samsung has signed supply agreements with the five largest global data center firms and is nearing deals with five others. The company aims to secure long-term contracts covering about two-thirds of its memory output. Such multi-year deals typically include upfront payments and floor pricing to hedge capital investment risks.

Samsung expects its HBM4 revenue to more than triple in the third quarter, a sign of strong demand for high-bandwidth memory used in AI accelerators.

To address the shortage, Samsung is on track to begin operations at its Taylor fabrication plant in Texas, US, this year, and aims to break ground on a second fabrication plant that could begin mass production in 2030.

Samsung has increased the prices of its Galaxy smartphones and tablets due to rising component costs. Apple projected revenue growth for the upcoming quarter to slow to between 9% and 11% year-over-year, while Nvidia is expected to raise consumer graphics card prices by 20% to 30% [source_ref:claim:17].

Competitor SK Hynix reported strong quarterly results but failed to meet investor expectations, and plans to increase capital spending by about 50% this year to meet AI demand. Elsewhere, Meta Platforms reported a 91% drop in second-quarter free cash flow, and Alphabet reported its first cash-flow-negative quarter,