Samsung Profit Surges on Memory Chip Shortage Driven by AI Infrastructure

Record Profit Streak Continues

Samsung Electronics is expected to announce operating profit of 86 trillion won ($56.35 billion) for the second quarter when it releases preliminary results on Tuesday. The figure represents an 18-fold increase from 4.7 trillion won in the same period last year, according to consensus estimates compiled by LSEG SmartEstimate from 30 analyst forecasts.

If confirmed, this would mark the third consecutive quarter of record operating profit for the world's largest memory chipmaker by sales. The sustained performance reflects a structural mismatch between supply and demand in the memory market, with production capacity struggling to keep pace with consumption from AI data centers and related infrastructure.

Beyond High-Bandwidth Memory

While high-bandwidth memory has captured industry attention, conventional DRAM and NAND products have also seen robust demand growth. The expansion stems from agentic AI applications, which differ fundamentally from earlier AI workloads focused on model training.

These newer AI systems execute multi-step tasks that require additional memory for server processors and expanded storage capacity to retain and retrieve data during inference operations. Samsung supplies memory chips to Nvidia, Google, and Apple, among other technology firms.

According to Citi Research, average selling prices for DRAM climbed 44 percent quarter-on-quarter in the second quarter, while NAND prices rose 53 percent. Analysts expect the memory market to remain undersupplied through at least next year.

Market Valuations Surge

The memory shortage has propelled share prices across the sector. Samsung Electronics stock has gained 158 percent this year, while SK Hynix and Micron have surged 273 percent and 242 percent, respectively. All three companies now carry market valuations exceeding $1 trillion.

Bonus Provision Uncertainty

Despite strong operational momentum, second-quarter earnings could fall below consensus estimates depending on how Samsung accounts for employee bonuses. In late May, the company reached a wage agreement with its semiconductor division workforce that allocates 10.5 percent of the division's operating profit to special bonuses for chip employees.

Some analysts estimate cumulative bonus provisions could exceed 40 trillion won. The timing of when Samsung recognizes these expenses in its accounting will influence reported profit figures. Detailed earnings results are scheduled for release later this month.

Infrastructure Investment Questions

Looking forward, analysts identify potential slowdowns in AI infrastructure spending as the primary risk to the current memory boom. Memory's share of cloud service provider capital expenditure is estimated at 52 percent this year and projected to exceed 70 percent next year, raising questions about sustainability.

Samsung and SK Hynix recently committed to investing 3,200 trillion won ($2.07 trillion) to expand chip manufacturing capacity in South Korea. Samsung plans to deploy this capital between 2026 and 2040, while SK Hynix has not provided a detailed timeframe.

Investors are seeking evidence that advances in AI services will translate into accelerated growth in cloud computing revenues, justifying memory's expanding portion of infrastructure budgets. Samsung disclosed in April that it has signed multi-year binding contracts with customers to secure supply commitments, though it did not reveal counterparty identities or contract terms.

Near-Term Price Outlook

Nomura forecasts commodity DRAM prices will rise 24 percent quarter-on-quarter in the July-September period, with NAND prices increasing 25 percent. The projections are supported by higher demand for consumer memory products and chips for both traditional and AI data centers.

Meanwhile, Samsung's mobile business faces margin pressure as rising memory prices increase component costs faster than the company can raise handset prices. Although Samsung has already implemented smartphone price increases, further adjustments may be necessary in the second half. Apple raised prices for iPads and MacBooks last month, signaling broader industry pricing dynamics.