Samsung Electronics expects a sharp rise in operating profit in the fourth quarter, driven by rising memory chip prices and strong demand linked to artificial intelligence. According to a Reuters report, the company said operating profit for the October-December period is expected to almost triple from the previous year, reaching a record high. The forecasts highlight how tight supply and growing demand for memory chips used in data centers, personal computers and smartphones have driven up prices. Samsung’s results come as global chipmakers scramble to expand capacity to meet growing AI-related needs, although concerns remain about rising costs for device makers and data center operators.
Record Quarterly Profit Forecast
Samsung estimated its operating profit at 20 trillion won ($13.82 billion) for the fourth quarter, according to a regulatory filing. This compares with 6.49 trillion won a year earlier and is higher than market expectations of around 18 trillion won. This would be Samsung’s highest quarterly operating profit ever, surpassing its previous peak in 2018.Shares of Samsung ended the day down 1.6%, after hitting a record high. The stock has gained about 155% over the past year.
Demand for AI drives up chip prices
Rising prices for conventional memory chips have supported profits across the sector. Demand has increased as companies invest heavily in AI servers and data centers.“The world is going to need more manufacturing factories and the reason is because of this new industry called AI factories,” said Jensen Huang, chief executive of Nvidia, during a speech at the Consumer Electronics Show in Las Vegas. “It’s good to be a semiconductor manufacturer,” he added, saying demand was “really, really great.”Market watchdog TrendForce said contract prices for some DRAM chips rose more than 300% in the fourth quarter from a year earlier and are expected to rise further in the current quarter.