Volkswacht Bodensee - Samsung quarterly operating profit up 1,800% on AI boom

Samsung and other leading memory chipmakers have seen profits skyrocket in 2026, but their share prices have proven volatile as investors question whether the artificial intelligence boom is over-hyped.

April-June operating profit came to 89.5 trillion won ($62 billion) -- up more than 1,800 percent on-year, Samsung said.

The company posted revenue of 171.5 trillion won, up 130 percent from a year earlier. Net profit soared nearly 1,300 percent on-year to 71.6 trillion won.

The bumper figures met market expectations, South Korea's Yonhap news agency said, citing its own financial data firm.

On Wednesday South Korean stocks suffered a sharp sell-off as traders unwound AI-driven bets, fretting whether lofty profit expectations are realistic.

Samsung fell more than 12 percent, while its main domestic rival SK hynix tumbled nearly 20 percent after 14 percent losses the day before -- halving its value from record highs last month.

SK hynix's second-quarter operating profit and revenue posted Wednesday came in below expectations, despite being massively higher than a year ago.

- 'Record-breaking quarter' -

Samsung Electronics, SK hynix and US firm Micron are the world's biggest manufacturers of advanced high-bandwidth memory (HBM) chips, used in AI processors to generate chatbot responses and realistic images.

Samsung said in a statement that its memory business "achieved another record-breaking quarter" with a primary focus on server products.

Its shares were up about three percent Thursday morning, after two straight days of losses.

The company said it expects robust server demand in 2026's second half, driven by infrastructure spending and the wider adoption of agentic AI -- which autonomously performs real-life tasks for users.

Chief financial officer Park Soon-cheol told an earnings call the company expects a global memory chip shortage to deepen in 2027 and remain tight through 2028.

Samsung said its first chip plant in Taylor, Texas, remains on track to begin operations this year.

Construction of a second facility is slated for later in 2026, with mass production targeted for 2030.

- 'Biggest risk' -

AI expansion has also pushed up prices and shipments of conventional NAND and DRAM memory chips to Samsung's advantage, analysts say.

"Samsung is leveraging its strong position in memory to aggressively capture share across most of its business units," MS Hwang, an analyst at market research firm Counterpoint, told AFP.

Over the weekend, Samsung announced it would pursue a "strategic collaboration" for the "supply of industry-leading memory solutions, including HBM" -- supporting US chipmaker Broadcom's next-generation AI accelerators.

The partnership is estimated to exceed $200 billion over the next five years through 2030.

The move could be seen as an effort by Samsung to find an AI memory customer base beyond US titan Nvidia, which has long relied on SK hynix for HBM, said Joo Won, head of Hyundai Research Institute's economic research division.

Rumours that Samsung could pursue a US listing after a $26.5 billion offering by SK hynix were dismissed by Park, who said the company has "no immediate need" to raise capital given its strong cash generation.

The semiconductor boom has boosted South Korea's tax revenue -- prompting President Lee Jae Myung to describe it as a "golden window" for fresh investments.

Seoul has confirmed plans for Samsung and SK hynix to invest a combined 800 trillion won in building four advanced chip fabrication plants at a former military airport site in Gwangju.

The Gwangju fab is a "long-term project that will take considerable time to materialise", analyst Joo told AFP.

"The biggest risk is that the semiconductor supercycle could be over by the time it's ready."

A.Ruegg--VB