By Heekyong Yang and Joyce Lee
SEOUL, Jan 8 (Reuters) – Samsung Electronics on Thursday projected a three-fold jump in fourth-quarter operating profit from a year earlier to a record high as tight supply and a surge in artificial intelligence-driven demand stoked prices for conventional memory chips.
The results highlight how chip prices have rocketed as chipmakers scramble to keep up with demand for memory chips used in servers, personal computers and mobile devices to meet AI needs.
The world’s largest memory chipmaker estimated an operating profit of 20 trillion won ($13.82 billion) for the October-December period, beating an LSEG SmartEstimate of 18 trillion won and up from 6.49 trillion won a year earlier, a regulatory filing showed.
The operating profit is a new quarterly record, topping its previous high of 17.6 trillion won in the third quarter of 2018.
The company expects revenue to rise 23% to a record 93 trillion won from a year earlier.
Samsung plans to release detailed results, including a breakdown of earnings for each of its business divisions on January 29.
Contract prices for a type of DRAM chip rose 313% in the fourth quarter from a year earlier, according to data from market tracker TrendForce.
TrendForce expects conventional DRAM contract prices to rise a further 55% to 60% in the current quarter from the previous one.
DRAM chips are used in servers, computers and smartphones to temporarily store data and help run programs and applications smoothly and swiftly.
RISING MEMORY COSTS
Analysts remain broadly optimistic about Samsung’s earnings outlook, citing expectations that memory undersupply will persist into 2026 as global data centre investment expands and capacity remains constrained.
However, some have cautioned that rising memory component prices could dampen demand and drive down margins for data centres, PCs and smartphones.
DB Securities analyst Seo Seung-yeon projected that fourth-quarter profit at Samsung’s mobile business is likely to decline from a year earlier due to higher component costs, while profit is expected to grow in its display business on robust sales of its major customer Apple’s iPhone 17 series.
Samsung’s co-CEO TM Roh, who oversees Samsung’s mobile, TV and home appliance business, told Reuters that some impact from rising memory prices was “inevitable”, and did not rule out raising product prices.
($1 = 1,446.9800 won)
(Reporting by Heekyong Yang, Joyce Lee and Hyunjoo Jin; Editing by Sonali Paul)
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