Samsung heads for 100 trillion won profit milestone in Q3, but stronger won may limit upside surprise

[NEWS ANALYSIS]

Samsung Electronics’ upcoming third quarter earnings will likely mark a major milestone, with the Korean tech giant widely expected to surpass 100 trillion won ($74.05 billion) in operating profit.

Despite the anticipation ahead of the preliminary earnings result set for Oct. 8, however, some analysts at local brokerages have actually lowered their forecasts as two factors threaten to weigh on the profit of its booming chip business: the won’s appreciation in recent months and a bonus provision.

The FnGuide consensus for the July-to-September period stands at 106.94 trillion won in operating profit and 200.77 trillion won in revenue as of Friday.

The won's faster-than-expected rise has led 13 of the 17 analysts tracked by FnGuide to put their estimates below 110 trillion won. The other four who forecast higher figures published their projections in July. The lower estimates factored in the effect of the strengthening local currency on chip orders, which are mostly placed from overseas and are largely sold in dollars, with earnings reported in won.

"The won-dollar exchange rate assumption was lowered from 1,440 won to 1,400 won on the recent strength of the local currency, and estimates were cut to reflect a widening loss in the Mobile eXperience division," said Son Ik-jun, an analyst at Eugene Investment & Securities, adding that the estimate also reflects additional provisions for performance bonuses.

From next year, Samsung will set aside provisions for bonuses in proportion to its operating profit, and employees in its semiconductor division are set to receive payouts next year.

There are also external factors to consider. The industry has been watching closely for any slowdown in chip price gains as a sign that the upcycle is turning.

Park Yu-ak, a semiconductor analyst at Kiwoom Securities, expects the price surge to cool in the fourth quarter, with downward pressure on commodity memory prices building as Samsung competes for market share with Chinese rivals CXMT and YMTC.

"Prices for commodity dynamic random-access memory [DRAM] and NAND, which have driven the company's overall earnings so far, are expected to rise only 3 percent and 12 percent from the previous quarter, respectively, as customers push back on higher prices and consumer demand stays weak," Park said in a report.

Although the surge in commodity memory prices may be slowing, most of the market is still betting that the memory crunch will persist, with some forecasts calling for high bandwidth memory (HBM) prices to more than double in 2027.

The Suwon, Gyeonggi-based chipmaker held the top spot in the global DRAM market with a 39 percent share in the second quarter, according to Counterpoint Research, followed by SK hynix at 26 percent and Micron hot on its heels at 25 percent.

In HBM, Samsung ranked second with a 33 percent share, behind SK hynix at 50 percent.

As HBM prices are set to climb even more steeply as supply stays short, Samsung, SK hynix and Micron are all pushing to expand capacity, but the new lines are not expected to come online before 2027.

During its latest earnings call, Micron maintained that the crunch will persist. Chairman and CEO Sanjay Mehrotra said the memory shortage will last through 2028 and that the market will be even tighter than it is this year. The U.S. chipmaker posted an earnings surprise for its fiscal fourth quarter that ended on Sept. 3 with revenue of $54.23 billion, up 379 percent on year, and adjusted operating profit of $44.64 billion, up 1,029 percent.

"In calendar 2027, as well as 2028, we see demand exceeding supply," Mehrotra said on Wednesday. "And in fact, we see greater tightness in the industry in 2027 and in 2028 versus 2026. So overall, supply-demand environment is only getting tighter."

Micron has already committed more than 75 percent of its 2027 output to customers, and most of its negotiations have moved on to 2028.

"We have completed agreements for the vast majority of our calendar 2027 HBM bit supply with significant price increases year-over-year, narrowing the gross margin gap with conventional DRAM," Mehrotra said.

Samsung is expected to keep allocating more wafer capacity to HBM to meet growing demand from hyperscalers. At Korea Premium Weeks 2026, a government-backed investor relations event for foreign investors, the company projected that HBM will account for more than one-third of global DRAM wafer capacity in 2027.

Samsung told investors that it would be strange if conventional DRAM was not in short supply, with HBM taking up 30 percent of total DRAM wafer capacity in just two to three years, KB Securities said in a report.

According to the report, HBM4, the sixth generation of HBM, is expected to double its share of Samsung's HBM revenue from 40 percent in 2026 to 80 percent in 2027, while the share of conventional DRAM in Samsung's total DRAM capacity shrinks from 73 percent in 2025 to 59 percent in 2027.

"HBM prices are estimated to rise more than 100 percent on year in 2027," said Kim Dong-won, the head of research at KB Securities.

Market tracker TrendForce expects an even steeper rise, with blended average selling prices up 121 percent to reflect persistent supply shortages, a larger share of higher-priced HBM4 and the gradual ramp-up of HBM4E in the second half of 2027.

"Against a backdrop of continued memory price increases, suppliers have also taken a firmer stance on raising HBM prices in 2027," TrendForce said.

BY LEE JAE-LIM [[email protected]]