Samsung chip profits soar as AI memory demand beats expectations

Core Viewpoint - Samsung Electronics Co.'s chip unit reported a more than five-fold profit gain, indicating strong demand for AI-related memory chips driven by increased spending in artificial intelligence [1][3]. Group 1: Financial Performance - Samsung's operating profit for the last three months reached 16.4 trillion won ($11.4 billion), surpassing analysts' expectations of 10.85 trillion won [4]. - The company's net income was 19.29 trillion won, exceeding estimates of 15.1 trillion won [4]. - Samsung announced a share buyback of 3.57 trillion won and a special dividend payout, raising its fourth-quarter payout to 3.75 trillion won [4]. Group 2: Market Dynamics - The demand for AI memory is outpacing global supply, benefiting both Samsung and SK Hynix, as evidenced by increased capital spending from companies like Meta Platforms Inc. and Microsoft Corp. [3]. - Memory manufacturers are shifting production towards high-bandwidth memory (HBM), which requires significantly more wafer capacity than standard DRAM, leading to potential supply shortages for consumer electronics [6]. Group 3: Competitive Landscape - Samsung is set to deliver its next-generation HBM4 to Nvidia in the first quarter, aiming to catch up with SK Hynix in this high-margin segment [2][7]. - Analysts suggest that Samsung's advancements in HBM technology may position it to lead the industry's transition to next-generation products [4][8]. Group 4: Investor Sentiment - Samsung's shares have more than doubled in value in 2025 and surged about 35% this month, reflecting optimism regarding memory chip price increases [5]. - The AI infrastructure investment by hyperscalers is driving significant growth in the memory chip market [5]. Group 5: Foundry Business - The AI boom is also positively impacting Samsung's foundry business, with sales growth expected and a focus on ramping up production of 2-nanometer products [8].