Samsung Electronics reported a record quarterly profit, more than tripling year-over-year, fueled by surging demand and prices for memory chips driven by the artificial intelligence boom. However, the company warned that the resulting global chip shortage is expected to worsen, creating significant challenges for its smartphone and display divisions.
The South Korean tech giant posted an operating profit of 20 trillion won ($13.98 billion) for the October-December period, a dramatic increase from 6.49 trillion won a year earlier. Revenue rose 24% to 93.8 trillion won.
The star performer was Samsung’s chip business, where operating profit skyrocketed 470% to a record 16.4 trillion won, accounting for over 80% of the company’s total profit. This surge is attributed to the AI race straining global chip supply and boosting memory prices.
“A significant shortage of memory products across the board is expected to continue for the time being,” said Kim Jaejune, an executive from Samsung’s memory chip division.
In stark contrast, the company’s mobile business saw profit decline by 10% to 1.9 trillion won, squeezed by the very same high memory chip costs that are benefiting its semiconductor unit. The display business, which supplies panels for clients like Apple and Samsung’s own phones, also anticipates a “challenging year” ahead as customers may push for price cuts amid rising component costs.
Analysts note that while memory price increases will continue to boost Samsung’s overall earnings, they will simultaneously intensify pressure on its handset division. “How the [mobile] division defends margins as the year progresses will be a key issue,” said Ko Yeongmin, an analyst at Daol Investment & Securities.
On the advanced chip front, Samsung revealed it is already producing its next-generation high-bandwidth memory (HBM4) chips and plans to begin shipping them in February at the request of a “major customer,” widely understood to be Nvidia. The company aims to catch up to cross-town rival SK Hynix, the current leader in supplying HBM for AI processors, and expects its overall HBM revenue to more than triple this year.
The industry-wide shift to produce more AI-specific memory has constrained the supply of conventional chips, putting chipmakers like Samsung in a powerful position. “They’re in the enviable position of being able to dictate price, terms, etc., more than ever,” said Tobey Gonnerman of semiconductor distributor Fusion Worldwide.
Despite the headwinds for its consumer electronics units, Samsung’s semiconductor business looks poised for continued strength as the AI-driven chip shortage persists.
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