Samsung Electronics reported a 19‑fold rise in second‑quarter operating profit compared with the same period a year earlier, yet its stock fell sharply on concerns that the AI‑driven chip surge may not last.
Investors watched closely.
Operating profit jumps, but shares tumble
The company estimated April‑June operating profit at 89.4 trillion won (about HK$483.5 billion), beating the LSEG SmartEstimate of 87.3 trillion won. A year earlier, profit had been 4.7 trillion won. Revenue is projected to climb roughly 129 percent to 171 trillion won, according to the filing.
Despite the strong numbers, Samsung shares slipped as much as 7.9 percent in morning trading, pulling the KOSPI down about 6 percent. Rival SK Hynix also fell, shedding up to 7.3 percent. Analysts said the market had already priced in the earnings boost, and the results did not calm worries that the AI‑related chip boom could stall.
Analysts weigh expectations and AI risks
Albert Yong of Petra Capital Management noted that “Samsung’s strong earnings were widely expected and had largely been priced in after its shares rallied ahead of the results.” He added that investors remain uneasy about the durability of AI spending by major U.S. tech firms.
Memory chip prices kept rising through the quarter as AI spending spread beyond high‑bandwidth memory (HBM) into conventional DRAM and NAND products. Lee Min‑hee of BNK Investment & Securities said Samsung posted better‑than‑expected earnings even after allocating funds for sizeable worker bonuses under a wage deal linking pay to operating profit.
Without those bonus provisions, analysts estimate operating profit could have topped 100 trillion won. Jeff Kim of KB Securities‑Jefferies warned that a memory chip shortage is likely to deepen this year and next, as capacity growth stays limited while demand stays strong.
Rapid HBM production has tightened supply of conventional memory used in smartphones, PCs and enterprise servers, further supporting prices. Citi Research reported average selling prices for DRAM and NAND rose 44 percent and 53 percent quarter‑on‑quarter, respectively, in the second quarter.
Customers are increasingly seeking longer‑term supply agreements, reinforcing expectations that memory prices will stay raised for longer and benefiting manufacturers with large‑scale production capacity such as Samsung.
While the memory business is set for another quarter of solid earnings, analysts expect losses at the foundry and logic chip (LSI) divisions to widen because bonus expenses are spread across the semiconductor unit.
Samsung will release detailed results on July 30, including a breakdown of earnings by division.
Broader AI spending and future outlook
The main risk to the memory boom is a slowdown in AI infrastructure investment. Delays in U.S. data‑centre construction caused by labour shortages, power constraints or local opposition could weaken demand across the AI hardware supply chain.
Investors also worry that the large technology firms may need to borrow heavily to fund AI infrastructure with uncertain returns, a factor that could dampen chip demand.
Historically, memory markets have been marked by boom‑and‑bust cycles, but some analysts argue the current growth is becoming more structural as AI demand outpaces the industry’s ability to expand production. Building new memory fabrication plants takes years, limiting supply growth even as hyperscale companies keep ramping up AI investment.
Samsung announced last week a plan to invest 2,100 trillion won in South Korea through 2040, though spending will be adjusted according to market conditions and business needs.
For those less familiar with the technical side, the surge in AI workloads has turned ordinary memory chips into a critical component of modern data centres. As AI models grow larger, they need more fast, high‑capacity memory, which in turn drives up demand for products like DRAM and NAND that Samsung manufactures at scale.
In the short term, the company expects profit to keep growing in the third and fourth quarters, but the pace will depend on how sharply demand for AI‑related hardware expands. The next earnings release will reveal whether the memory boom can sustain its momentum or if the market will see a correction.
