Record Profits Driven by Memory Sales
Samsung on Thursday reported a record-breaking operating profit of 20 trillion won ($14 billion) for the fourth quarter, more than tripling from 6.49 trillion won a year earlier. The results highlighted the pricing power of the world’s top memory chip maker as AI-driven demand strains supply and pushes up prices.
The company’s chip division, its primary profit engine, posted 16.4 trillion won in operating profit—an increase of 470% year-on-year—accounting for over 80% of Samsung’s total profit.
At the same time, Samsung’s mobile unit saw profit fall 10% to 1.9 trillion won, as soaring memory prices raised production costs.
Memory Shortage Expected to Continue
Samsung executives warned analysts that the shortage of memory products is likely to persist.
“A significant shortage of memory products across the board is expected to continue for the time being,” said Kim Jaejune, Samsung’s memory business executive. He added that any supply expansion is likely to be limited until 2026 and 2027, while AI-related demand remains strong.
Smartphone and Display Units Under Pressure
The shortage is creating a notable headwind for Samsung’s mobile and display divisions. The company said these businesses face a “challenging year”, as memory price increases raise costs for products used by major customers like Apple and Samsung itself.
Samsung’s mobile division is working with partners to stabilize supply and improve efficiency to protect profit margins. Co-CEO TM Roh described the shortage as “unprecedented” and did not rule out raising prices.
Analysts warn that defending margins will be critical for the year ahead.
Display Business Sees Mixed Results
Samsung’s display business reported 2 trillion won in profit in the fourth quarter, more than doubling due to strong demand for Apple’s iPhone 17 series. However, the unit expects smartphone demand to weaken in the current quarter and anticipates customers will seek price cuts.
HBM Chips: A Major AI Opportunity
Samsung also announced it is already producing its next-generation HBM4 (high-bandwidth memory) chips and plans to begin shipping them in February at the request of a “major customer,” believed to be Nvidia. Samsung expects HBM revenue to more than triple this year, having secured orders for all its HBM capacity.
Samsung has been working to catch up with rival SK Hynix, a major supplier of HBM chips crucial for Nvidia’s AI accelerators. SK Hynix has stated it remains confident in maintaining its dominant market share in HBM4 and has ramped up production to meet demand.
AI Drives Industry-Wide Supply Shift
The AI infrastructure race has pushed chipmakers to allocate more manufacturing capacity to HBM for AI servers, tightening supply of conventional memory chips. This imbalance has enabled chipmakers to raise prices sharply.
“They’re in the enviable position of being able to dictate price, terms, etc. more than ever,” said Tobey Gonnerman, president of semiconductor distributor Fusion Worldwide.