Samsung’s third-quarter profit more than doubles, beating estimates on strong demand from AI chips

Samsung Electronics reported a significant rebound in Q3 earnings, with operating profit more than doubling quarter-over-quarter to 12.2 trillion Korean won, exceeding analyst estimates, primarily driven by robust demand for memory chips from artificial intelligence servers. The company's chip business saw a tenfold increase in operating profit QoQ, achieving record high sales for its memory division, particularly in high-bandwidth memory (HBM) chips. Samsung anticipates continued strong AI-related server demand to outpace industry supply and plans to focus on mass production of its next-generation HBM4 technology, further bolstered by recent qualification for advanced HBM chips by Nvidia.

Analysis

Samsung Electronics reported a significant earnings rebound in Q3, with operating profit more than doubling from the previous quarter to 12.2 trillion won, surpassing LSEG SmartEstimate of 11.25 trillion won. Quarterly revenue reached 86.1 trillion won, slightly above the 85.93 trillion won estimate. This strong performance, which saw quarterly revenue rise 8.85% year-over-year and operating profit climb 32.9% year-over-year, led to Samsung shares popping nearly 4% in early trading.
The primary catalyst for this rebound was robust memory chip demand from artificial intelligence servers, driving the chip business's operating profit up over tenfold quarter-over-quarter. The memory business achieved an all-time high for quarterly sales, with chip revenue increasing 13% year-over-year to 33.1 trillion won and operating profit rising 81% year-over-year to 7.0 trillion won. Expanded sales of high-bandwidth memory (HBM) chips were a key factor in this growth.

Despite previously lagging SK Hynix in the HBM market, Samsung reportedly passed Nvidia's qualification tests for an advanced HBM chip last month, indicating improved competitive positioning. Counterpoint Research also noted Samsung reclaimed the top spot in the memory market in Q3. The company anticipates continued AI chip demand growth exceeding industry supply and plans to focus on mass production of HBM4 heading into 2026.

The mobile experience unit also contributed positively, posting an operating profit of 3.6 trillion won, up 28% year-over-year, driven by strong flagship smartphone sales, including the Galaxy Z Fold7. Samsung forecasts the rapid growth of the AI industry will create new market opportunities across both its device and chip businesses, reinforcing an optimistic outlook.

Key Decisions for Investors

• Investors should monitor Samsung's HBM production ramp-up and further qualification successes with key AI chip partners like Nvidia.
• Assess the sustainability of AI server demand growth against potential increases in industry supply and competitive dynamics.
• Evaluate Samsung's ability to maintain its reclaimed top position in the memory market, particularly in the high-growth HBM segment, against rivals like SK Hynix.