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Samsung Electronics reported a staggering second-quarter operating profit that crushed analyst estimates, primarily driven by soaring global demand for AI-specific memory chips. The company saw a remarkable 1,814% year-on-year jump in profit, fueled by record sales of DRAM and NAND, and is strategically investing in HBM technology and expanding production to meet future AI infrastructure needs. Despite a dip in its mobile division due to rising component costs, Samsung anticipates continued robust demand for memory chips through 2027 and is exploring new growth avenues in robotics.
Samsung Electronics has once again shattered profit expectations, extending its remarkable run with a second-quarter operating profit that significantly topped analysts' forecasts. This impressive performance is largely fueled by the relentless demand for artificial intelligence (AI) chips, which continues to propel growth in its crucial memory chip division.
The South Korean tech titan reported an astounding 1,814% year-on-year surge in quarterly operating profit, reaching 89.5 trillion won ($61.9 billion), comfortably beating LSEG SmartEstimates of 88.13 trillion won. Revenue also saw a robust jump of 130% year-on-year, though it came in at 171.5 trillion won ($118.7 billion) just shy of the 172.65 trillion won expected. Both figures, however, were consistent with Samsung's preliminary forecast released earlier this month.
The company specifically highlighted AI server demand as the primary catalyst behind its record-breaking memory earnings, leading to all-time high sales for both DRAM and NAND chips. These essential components are critical for a vast array of electronic devices, from advanced smartphones to automotive systems and high-performance servers.
To keep pace with this burgeoning demand, Samsung increased its memory capital expenditure quarter-over-quarter, expanding investments in its new Pyeongtaek fabrication plant and other infrastructure projects. The firm also continues to pour resources into advanced research and development.
A significant development includes the scaling up of HBM4 (High-Bandwidth Memory) sales and the shipment of the industry's first HBM4E samples to key customers. HBM4, Samsung's sixth-generation high-bandwidth memory, is specifically engineered to power cutting-edge AI processors, including those found in Nvidia's Vera Rubin Platform.
Accelerating Demand & Future Outlook
Samsung reports an exponential rise in demand for both general-purpose computing and AI-specific applications. The company is strategically managing its product mix to balance the demand for HBM and server DRAM, aiming to support long-term AI growth.
Looking ahead, the tech giant anticipates robust memory demand, especially for servers, in the second half of the year, driven by ongoing AI infrastructure capital expenditure and the widespread adoption of agentic AI. This includes an expected acceleration in demand for server DRAM, enterprise SSDs (eSSDs), and HBM.
The company projects that supply constraints will tighten even further in 2027, as rapidly expanding AI token generation drives exponential demand over the medium to long term. In response, more customers are seeking multi-year supply agreements to secure critical AI infrastructure capacity, providing Samsung with clearer visibility into future demand and greater flexibility in investment planning. Samsung has already finalized agreements with five top global data center customers and is in advanced discussions with five additional major accounts for AI-related demand.
While media reports have speculated on a potential U.S. listing, Samsung clarified it is "not currently reviewing an ADR issuance." However, it noted that an ADR remains "one of several possible options that could be open for consideration" from a long-term shareholder value perspective.
Recently, Samsung unveiled its latest foldable smartphones and announced an expanded strategic collaboration with Broadcom across memory and foundry technologies.
Despite the immense strength of its memory business, analysts like Josh Gilbert, lead analyst for APAC at eToro, point out Samsung's increasing dependence on this segment. Its mobile and networks business, for instance, swung to a 700 billion won loss, squeezed by the very component price increases that are driving the semiconductor boom. Elevated component costs were cited for the decline, despite year-on-year revenue growth from strong sales of the Galaxy S26 and A series.
In a strategic move, Samsung recently established a robotics division under the direct oversight of its CEO, signaling robotics, alongside AI, as a key growth area. The company is actively exploring collaborations with startups and potential mergers and acquisitions to accelerate its strategy in this field.
