Workers walk past Samsung Electronics' headquarters in Suwon, Gyeonggi, on Oct. 8.YONHAP
Samsung Electronics is projected to post the highest quarterly operating profit so far this year among global tech companies at 107.4 trillion won ($80.3 billion) on Thursday, surpassing banner quarters for U.S. giants including Nvidia and Alphabet.
It is the first time Samsung — or any Korean company — has crossed the 100 trillion won mark in quarterly operating profit, driven by sustained memory demand and rising chip prices. The figure, up 782.5 percent from a year earlier, beat the FnGuide consensus of 106 trillion won. Analysts had recently lowered their estimates from the 110 trillion won range because of the stronger won.
Revenue is expected to have jumped 126.59 percent on year to 195 trillion won, slightly short of analyst forecasts of 200.3 trillion won.
The operating profit estimate came in below the 110 trillion won analysts predicted a few months ago, when bullish sentiment ran high as the memory crunch kept pushing chip prices up. Still, it exceeds the latest quarterly results of tech powerhouses: Nvidia reported $63.7 billion, Alphabet $40.77 billion, Microsoft $40.6 billion, Apple $35.7 billion, Amazon $27.5 billion and Meta $18.8 billion. Of the six, Nvidia, Alphabet, Microsoft and Amazon posted record profits.
Most of these figures cover the April-to-June quarter, one quarter earlier than Samsung's July-to-September results. Nvidia's quarter ended in late July. None of the six have reported a larger quarterly operating profit to date, though their next quarter results are not due until later this month.
The milestone is all the more notable because Samsung cleared 100 trillion won even after booking an estimated 10 trillion won or more in bonus provisions for its chip division employees this quarter.
The Korean behemoth did not provide a breakdown by division and will release full earnings later this month. Meritz Securities estimates the semiconductor business logged 110 trillion won in operating profit, with 111.9 trillion won from memory offset by a 1.9 trillion won loss from chip design and contract manufacturing. The brokerage expects its display business to have posted 1.1 trillion won in profit and Harman 400 billion won, while the smartphone and network business likely lost 1.8 trillion won and home appliances 400 billion won.
"The company has kept its price leadership in dyanmic random-access memory [DRAM] and NAND over rivals, built on pricing power it has accumulated through several past industry cycles," said Kim Sun-woo, a semiconductor and display analyst at Meritz Securities. "Meanwhile, its foundry utilization has also improved alongside its stronger memory competitiveness, but costs are likely to have continued to rise with the start of operations at the Taylor fab."
Despite the record earnings, Samsung shares fell 1.49 percent from the previous trading day to 264,500 won on Thursday, as analysts believe that the market had already priced in booming memory demand.
Korean brokerages, however, remain upbeat on the stock as Samsung strengthens its position in high bandwidth memory (HBM).
Meritz Securities kept its target price at 500,000 won on Wednesday, unchanged from July. Daishin Securities held its target at 560,000 won, Hanwha Securities at 580,000 won and Kyobo Securities at 500,000 won.
The highlight of third quarter results is the memory chip revenue, which is projected to top $100 billion in a single quarter for the first time, according to a Daishin Securities report on Thursday.
During its July conference call, Samsung said it expected third quarter sales of its sixth-generation HBM4 to more than triple from the previous quarter.
Engineers walk at a Samsung Electronics factory in Pyeongtaek, Gyeonggi.YONHAP
Samsung's share of the HBM market rose to 33 percent in the second quarter from 21 percent in the first, according to Counterpoint Research, and is expected to expand further as HBM4 shipments ramp up in the second half. The market also expects the company's HBM prices to more than double in 2027 from this year, with its products contracted at the highest price among the three memory makers including SK hynix and Micron. The share of HBM4 products in Samsung's HBM sales is expected to double from 40 percent this year to 80 percent in 2027, according to KB Securities.
Investors remain wary of a cycle peak, with forecasts that price gains for conventional memory such as DRAM and NAND will slow next year.
For now, prices are still climbing. The average price of general-purpose PC DRAM was $26 last month, up for a sixth straight month to a record high, according to DRAMeXchange. The average price of general-purpose NAND for memory cards and USB drives also hit a record $30.60, rising for a 21st consecutive month.
"We expect upside surprises in DRAM prices [in the future], led by server DRAM in the fourth quarter and mobile DRAM in the first quarter of next year," said Ryu Hyung-keun, an analyst at Daishin Securities. "This could push earnings forecasts even higher."
