Samsung's quarterly profit surges 783% to record $80.19 billion on AI chip boom

Riding a surge in demand for artificial intelligence chips, Samsung Electronics reported a record operating profit of 107.44 trillion won (approximately $80.19 billion) for the third quarter of 2026, becoming the first global technology company to surpass the 100 trillion won mark in quarterly operating earnings, according to The Korea Herald.

The South Korean technology giant recorded a 783.1 per cent year-on-year increase in operating profit, driven largely by strong sales of advanced memory chips used in artificial intelligence systems.

Quarterly revenue climbed 126.9 per cent to 195.25 trillion won (approximately $145.73 billion), marking the company's fourth consecutive quarterly revenue record.

Net profit also surged 514.6 per cent from a year earlier to 75.14 trillion won (around $56.09 billion).

The results highlight the growing importance of AI infrastructure spending to Samsung's semiconductor business, even as its smartphone, television and home appliance operations face financial pressure.

AI memory chips drive Samsung's record earnings

Samsung's semiconductor division emerged as the biggest contributor to its quarterly performance, supported by accelerating demand for high-bandwidth memory (HBM) chips.

Revenue from the company's sixth-generation HBM4 memory chips more than tripled during the quarter.

HBM4 accounted for approximately 60 per cent of Samsung's total HBM revenue, helping the company achieve its targeted market share ahead of schedule.

The strong demand has also strengthened Samsung's position in negotiations with major technology customers seeking long-term access to advanced memory chips.

"Negotiations for our 2027 HBM supply have been completed at prices reflecting our product competitiveness," The Korea Herald quoted Samsung as saying.

"The volume is already sold out," the company added.

Despite the existing supply commitments, major customers have continued requesting additional quantities, indicating that demand remains ahead of available capacity.

Samsung also reported encouraging initial feedback from customers who received samples of its next-generation HBM4E chips in May.

The company has secured long-term memory supply agreements with 10 major customers and is holding discussions with another 10.

Through these arrangements, Samsung is seeking to secure commitments covering 60 to 70 per cent of its manufacturing capacity through 2030.

Semiconductor division dominates quarterly profits

Samsung's Device Solutions division, which oversees its semiconductor operations, generated revenue of 147.1 trillion won (approximately $109.79 billion).

The division recorded an operating profit of 106.5 trillion won (around $79.77 billion), accounting for the overwhelming majority of the company's overall earnings.

However, the performance of its consumer electronics business presented a contrasting picture.

The Device eXperience division, responsible for smartphones, televisions and home appliances, reported revenue of 52.1 trillion won (approximately $39.02 billion).

Despite the substantial revenue, the division posted an operating loss of 800 billion won (around $599.2 million).

Meanwhile, Samsung Display reported revenue of 8 trillion won (approximately $5.99 billion) and operating profit of 1.1 trillion won (around $823.9 million).

Harman, the company's automotive technology and audio subsidiary, generated revenue of 4.3 trillion won (approximately $3.22 billion), with operating profit reaching 600 billion won (around $449.4 million).

The figures underline the widening gap between Samsung's booming semiconductor operations and its consumer-facing businesses.

Samsung plans massive investment in chip manufacturing

To strengthen its manufacturing capabilities and address growing demand, Samsung has outlined capital expenditure of 84.4 trillion won (approximately $63.2 billion) for 2026.

The planned investment represents an increase of 31.7 trillion won (around $23.74 billion) compared with the previous year.

Of the total, 76.8 trillion won (approximately $57.52 billion) has been allocated to semiconductor operations, while 3.9 trillion won (around $2.92 billion) is earmarked for display manufacturing.

During the third quarter alone, Samsung invested 29 trillion won (approximately $21.72 billion), including 27.2 trillion won (around $20.37 billion) in its chip business.

The company is also evaluating additional semiconductor fabrication facilities in South Korea and the United States to address supply constraints.

At its manufacturing facility in Taylor, Texas, equipment installation and cleanroom operations have begun.

Samsung is simultaneously expanding its advanced chip-packaging capacity to support growing demand for sophisticated semiconductor products.

"Capacity expansion at advanced nodes is not keeping pace with demand," the company stated.

Samsung is also examining the possibility of adding manufacturing lines for 2-nanometre chips, which are used in artificial intelligence and high-performance computing applications.

AI chip shortage could continue until 2028

Samsung expects the semiconductor industry's growth momentum to continue through 2027 as major technology companies maintain spending on artificial intelligence infrastructure.

The company also indicated that shortages in memory chip supply could persist into 2028.

The outlook suggests that demand for advanced memory products may remain strong as AI computing systems require increasingly sophisticated semiconductor technology.

For Samsung, securing production capacity and maintaining reliable supplies to major customers will be crucial to sustaining the earnings momentum.

The company is seeking to address these requirements through additional manufacturing investments, long-term supply agreements and the development of next-generation memory products.

Samsung announces dividend and share buyback plans

Alongside its record financial results, Samsung's board approved a third-quarter dividend of 4,601 won (approximately $3.45) per share.

The company plans to distribute approximately 30 trillion won (around $22.47 billion) to shareholders on November 27.

Samsung has set a shareholder return allocation target of 90 trillion won to 110 trillion won (approximately $67.41 billion to $82.39 billion) for 2026.

Following the latest dividend announcement, between 55 trillion won and 75 trillion won (around $41.20 billion to $56.18 billion) remains unallocated under the programme.

"The return of the remaining funds will include a substantial share repurchase and cancellation program, along with cash dividends," the company confirmed.

With demand for AI chips showing little sign of slowing, Samsung's semiconductor operations are expected to remain central to its financial performance in the coming quarters.