A 15x increase isn't enough! Samsung's Q3 semiconductor division's profit fell short of expectations, and the AI storage feast was “tortured in return”

The Zhitong Finance App learned that the myth of profiteering memory chips continues, but the capital market is beginning to question the “ceiling.”

On Thursday, Samsung Electronics released its financial report for the third quarter ending September 30, and handed over a report card that was “the most profitable in history” yet “below expectations”: consolidated operating profit of 107.4 trillion won (about 80 billion US dollars), surging 783% year on year, setting a new record for the fourth consecutive quarter. This is also the first time that a global technology company's profit in a single quarter has broken the 100 trillion won mark. Consolidated revenue for the quarter reached 195.25 trillion won, up 126.9% year over year.

However, what the market is more concerned about is that slight gap — the semiconductor division's operating profit of 106.5 trillion won, which is about 2 trillion won lower than analysts' average forecast of 108.5 trillion won. At a time when the boom in AI infrastructure investment is sweeping the world, this “gap” of 2 trillion won is enough for investors to re-examine the success of this AI-driven memory chip supercycle.

Affected by this, Samsung's stock price in the Korean stock market fell by more than 4%.

According to financial reports, the semiconductor (DS, equipment solutions) division had quarterly revenue of 147.1 trillion won and operating profit of 106.5 trillion won, a year-on-year increase of more than 15 times, contributing to almost all of the company's profits. Strong demand for high-bandwidth memory (HBM) and server SSDs, combined with soaring memory chip prices, pushed the division's operating margin to an all-time high of around 72%.

However, in stark contrast to the brilliance of the semiconductor division, the DX (Device Experience) division, which is responsible for terminal businesses such as smartphones and home appliances, recorded an operating loss of about 800 billion won, continuing the loss trend of the previous quarter. The reason is that the increase in the price of memory chips is a “double-edged sword”: while supporting semiconductor profits, it has raised the cost of components for mobile phones and consumer electronics, and squeezed the profit margins of downstream businesses.

This split between ice and fire has also caused tension within the company over the distribution of departmental performance bonuses — employees in the semiconductor department and colleagues in the consumer electronics department are on opposite ends of the profit spectrum.

Market anxiety behind “falling short of expectations”

The analysis points out that the semiconductor division's operating profit of 106.5 trillion won, which is lower than analysts' average forecast of 108.5 trillion won, “poured cold water” on the recent rise in AI optimism.

The source of anxiety is that investors are beginning to wonder whether Samsung can fully turn the industry's supply shortages into higher profit margins — especially in a context where competitors are locking in huge profits through long-term orders for high-bandwidth memory. SK Hynix (SKHY.US) has taken the lead with a long-term HBM contract that is deeply tied to the NVDA.US (NVDA.US) AI accelerator, and Samsung, as a “latecomer” in the HBM market, is still struggling to catch up.

More macro-level concerns point to the sustainability of the AI narrative itself. Recently, neocloud (neocloud) vendors represented by CoreWeave (CRWV.US) — professional developers focusing on AI data centers — have experienced successive setbacks, once shaking the market's confidence in the long-term resilience of AI infrastructure investment. Although hyperscale cloud vendors such as Meta (META.US) and Amazon (AMZN.US) are still investing hundreds of billions of dollars in infrastructure, questions about “when these investments will generate sufficient returns” have never stopped.

What investors want to see is proof of stronger profitability, a better product structure, and a longer term customer commitment. The financial report previously released by SK Hynix can be called a “explosion,” and it announced plans to return another 45 billion US dollars to shareholders. At the same time, the supply shortage is expected to continue until at least 2030, providing confidence in the long-term boom on the demand side.

Samsung, on the other hand, announced in August that it plans to return up to 110 trillion won to investors this year and return about half of the free cash flow to shareholders. Of these, it plans to distribute 30 trillion won in cash dividends in the third quarter and buy back about 15 trillion won of shares for employee compensation.

Samsung's financial report shows a typical “supercycle” picture: the shortage of memory chips is driving prices and profits to go hand in hand, the semiconductor business is completely ruined, while the terminal business is under pressure and the sustainability of AI investment is questionable, creating two dark clouds hanging over the head.

For investors, the key question is no longer “how much money was earned this quarter”, but “how long can such huge profits last.” Samsung expects a sharp increase in memory chip capital expenditure in 2027, and believes that the tight chip supply situation will continue until 2028, and SK Hynix will extend its vision to 2030. If this judgment holds true, the profit boom of memory chip manufacturers can still be expected for several years; however, if the return on AI capital expenses cannot be realized, current high valuations and high profits may face drastic revaluation.