Samsung sees chip supply shortages worsening due to AI boom; shares surge 8%
- Samsung shares surged 8% and SK Hynix shares rebounded 3% in early trading after the earnings call
Samsung Electronics expects strong AI chip demand to exacerbate supply shortages through 2028, despite investor concerns, as its semiconductor profit surged over 250-fold in the second quarter.
- Samsung's semiconductor division's massive profit surge.
- Anticipated worsening of AI chip supply shortages through 2028.
- Samsung's mobile division loss due to surging chip prices.
SEOUL: Samsung Electronics said on Thursday AI chip demand remained strong and could exacerbate supply shortages next year, countering investor concerns that feverish AI spending by major technology firms may slow and curb growth.
The world’s top memory chipmaker posted a more than 250-fold rise in semiconductor profit in the second quarter, marking a sharp turnaround as it races to catch up with SK Hynix in supplying high bandwidth memory (HBM) chips used in AI processors.
“The supply shortage in 2027 is expected to worsen compared to this year, and it is expected to continue in 2028,” Jaejune Kim, executive vice president of Samsung’s memory business, told analysts on a call.
Samsung shares surged 8% and SK Hynix shares rebounded 3% in early trading after the earnings call.
That follows a sharp slide in recent months, as chip stocks have lost momentum amid investor concerns about funding for the AI infrastructure buildout and competition from China that could put chip earnings under pressure.
Kim said demand that could not be met this year was being pushed into next year because of tight supply and this could add to future supply constraints.
“In H2 2026, the Memory Business expects robust demand centered on servers stemming from continued AI infrastructure capex and broader adoption of agentic AI,” Samsung said in a statement.
“This is projected to keep the market undersupplied, despite partial demand moderation in mobile and PCs.”
Samsung’s semiconductor division posted an operating profit of 89.2 trillion won ($61.7 billion) in the second quarter, up over 250-fold from a year earlier.
However, those surging chip prices hurt Samsung’s mobile division, which reported a 700 billion won loss, its first quarter in the red.
Samsung cuts US jobs, offers relocations ahead of HQ move
“The chips enriching one side of Samsung are now hurting the other, leaving the group more exposed than ever to memory pricing and the durability of hyperscaler demand,” said Josh Gilbert, an analyst at eToro.
Samsung reported operating profit of 89.5 trillion won ($61.98 billion) for the April-to-June period, in line with its estimate of 89.4 trillion won and up from 4.68 trillion won a year earlier.
The South Korean company’s revenue rose 130% to 171.5 trillion won in the quarter from a year earlier.
Samsung’s cross-town rival SK Hynix on Wednesday reported bumper quarterly results but fell short of lofty investor expectations. It flagged plans to raise capital spending this year by around 50% to meet surging AI demand.
Comments