Samsung Electronics projected an operating profit of 107.4 trillion won (S$95.7 billion) for the July-September period on Oct 8 — a figure the company says marks a world first for a technology company in a single quarter.

The estimate, disclosed in a regulatory filing, came in slightly ahead of the LSEG SmartEstimate of 106.1 trillion won. Samsung expects third-quarter revenue to rise 127% to 195 trillion won from 2025.

The forecast represents Samsung's fourth consecutive quarter of record operating profit. The world's largest memory chipmaker credited booming demand for AI chips, which has driven strong memory sales and a deepening global memory shortage as AI infrastructure investment outpaces supply growth.

Samsung's shares rose 0.3% in early trade, outperforming a 0.1% fall in the benchmark KOSPI.

What drove the earnings surge?

Memory chips are expected to account for the bulk of the improvement. Prices have soared on tight supply of conventional DRAM and NAND chips as well as growing demand for high-bandwidth memory (HBM), which is essential for processing vast amounts of data in AI applications.

Analysts expect supply to continue lagging demand, with the imbalance potentially widening in 2027 as AI-related demand absorbs an increasing share of global memory capacity. Samsung and Micron expect the imbalance to persist into 2028.

• Conventional DRAM bit shipments: broadly flat, limited by inventories
• HBM shipments: sharp quarter-over-quarter increase expected on HBM4 demand
• HBM bit shipments grew close to 50% quarter-over-quarter in Q3, according to Douglas Kim of Douglas Research Advisory

US rival Micron, a key HBM supplier to Nvidia, said on Oct 7 that the chip market could be tighter in 2027 and 2028 than in 2026, after forecasting quarterly revenue well above estimates.

"There were uncertainties surrounding Samsung's earnings as analysts cut their estimates, but the results turned out to be better than expected," said Lee Jae-won, an analyst at Yuanta Securities.

Lee said investors would also watch for details of Samsung's shareholder return policy during its earnings call later in October. The company will release detailed results, including a divisional breakdown, on Oct 29.

Where do the risks sit?

A stronger South Korean won may offset some of the gains by reducing the value of dollar-denominated overseas sales when converted into local currency.

Higher memory prices also squeeze margins in Samsung's own smartphone and consumer electronics divisions, which face mounting component cost pressure.

The foundry business is expected to remain loss-making because of fixed-cost burdens and still-low utilisation rates. Analysts expect utilisation to improve over the next several quarters on stronger demand for advanced manufacturing processes, as Samsung works to narrow the gap with industry leader TSMC.

AMD chief executive officer Lisa Su said on Oct 7 that the US chipmaker continues to explore partnership opportunities with Samsung in the memory and foundry businesses — a potential boost to Samsung's foundry ambitions.

How serious is Chinese competition?

The longer-term expansion of Chinese memory-chip makers remains a potential challenge. For now, Chinese producers are expected to remain more dependent on domestic customers, including Chinese AI-chip developers and PC and smartphone manufacturers.

Analysts said US restrictions on China's access to advanced chipmaking equipment continue to limit how quickly Chinese producers can expand.

US semiconductor tariffs present another uncertainty, as Washington pushes chipmakers to expand manufacturing capacity in the United States. Analysts noted it would take several years for any new US capacity to boost global memory supply, since large-scale fabrication plants take years to build and ramp up.