Samsung reports the highest profit ever for a tech company

The government of South Korea has set itself the goal of developing its country into the leading AI power alongside the USA and China. If you look at the current business figures of the South Korean Samsung Group, they have made a good deal of progress: Thanks to rapidly rising prices for memory chips, Samsung earned more in the past quarter than any other technology company before.

According to preliminary calculations, operating profit increased ninefold to the equivalent of 71.68 billion euros, as Samsung announced. This is the fourth record quarterly profit in a row. Although sales rose by 127 percent, they fell slightly short of market expectations at 130 billion euros. Samsung plans to present its final quarterly results on October 29th.

Due to the global data center construction boom, the semiconductor industry is currently unable to meet demand. It extends beyond AI high-performance memory (HBM) to conventional DRAM and NAND components used in PCs and smartphones. According to Samsung, the supply situation will not ease until 2028 at the earliest. In order to secure the high investments in additional production facilities, the group is seeking long-term supply contracts with data center operators.

Race with South Korean rival SK Hynix

The strong growth in profits is primarily due to the high-margin business with HBM storage. These are needed in AI data centers because they can cache and output data particularly quickly. Sales of these products probably increased by 50 percent in the third quarter compared to the previous quarter, said Douglas Kim, founder of the analysis company Douglas Research. With this, Samsung could probably reduce the gap to its arch-rival SK Hynix, the HBM world market leader.

Despite the renewed jump in profits, Samsung shares lost 2.4 percent on the Seoul Stock Exchange on Thursday. Hynix's shares lost a similar amount, and shares of its US competitor Micron fell by three percent in premarket trading on Wall Street.

The current memory chip boom also has downsides for Samsung. While the semiconductor division is benefiting from rising prices, the smartphone and consumer electronics business is suffering from shrinking profit margins. According to analyst estimates, the cell phone division made an unexpectedly high loss of the equivalent of around 894 million euros in the third quarter. Samsung is particularly competing with Apple here.

Samsung wants to distribute a record sum of 73 billion euros to its shareholders this year. Stock marketers are hoping for details on this when the detailed business figures are published at the end of the month. The employees also benefit from the group's current success. They had secured significantly increased bonus payments in the spring. 10.5 percent of the company's profits are distributed, and on average each employee receives the equivalent of around 290,000 euros - in the semiconductor division often significantly higher.