Samsung Electronics announced its second-quarter operating profit rose 1,813.8% year on year, reaching 89.49 trillion won (about $62 billion), as surging demand for high-bandwidth memory (HBM) chips used in artificial intelligence applications drove record earnings.
Year-on-year increase in operating profit
The company's second-quarter revenue rose 130% year on year to 171.49 trillion won, setting an all-time quarterly record, according to the company. Net profit soared 1,299.9% to 71.62 trillion won. Sequentially, operating profit grew 56.37% and revenue increased 28.11% from the previous quarter.
The earnings report triggered a debate among analysts: while some, citing Yonhap news agency, said the results met market expectations, others argued that operating profit topped analysts' estimates. Samsung's semiconductor division operating profit was 223 times its year-earlier level, reaching 89.2 trillion won compared to 0.4 trillion won a year ago.
"Despite our efforts to increase production, demand growth is outpacing our efforts."
The words of Kim Jaejune, executive vice-president of Samsung's memory chip division, underscore the supply-demand imbalance. Samsung expects the gap between chip supply and demand to widen further in 2027 and the shortage to persist into 2028. The company has secured long-term chip supply contracts with the world's five largest data centre companies and is close to agreements with five more, Kim said.
Samsung and SK hynix together produce about two-thirds of the world's memory chips. Both companies have benefited from AI-driven demand, but their stock prices have recently fallen. Samsung's shares dropped more than 12%, while SK hynix shares tumbled nearly 20% after its own record quarterly profit, which missed analysts' estimates. SK hynix's net profit soared 1,242%. Eugene Investment & Securities analyst Son In-joon attributed the share volatility to investors shifting focus from short-term earnings to long-term sustainability.
MS Hwang, an analyst at Counterpoint, said Samsung's HBM business is "driving a significantly positive impact on their foundry business as well" and that Samsung is "leveraging its strong position in memory to aggressively capture share." The company's first semiconductor fabrication plant in Taylor, Texas is on track to begin operations in 2026, with a second factory planned for mass production in 2030.
Samsung's non-chip businesses, including mobile, TV and home appliances, posted an operating loss in the second quarter. Last week, the company unveiled new foldable smartphones and expanded collaboration with Broadcom. The chiefs of Samsung, SK and Hyundai recently joined South Korean President Lee Jae Myung on a San Francisco trip to announce hundreds of billions of dollars in planned cooperation with US tech companies including OpenAI, Anthropic, Nvidia, and Broadcom.