Samsung Electronics 1st Korean firm to top $80 bil. in quarterly operating profit

Samsung Electronics on Thursday estimated 107.4 trillion won ($80.28 billion) in operating profit for the third quarter, becoming the first Korean company to surpass 100 trillion won in quarterly operating profit.

In a regulatory filing, the company said its third-quarter operating profit and revenue are each estimated at 107.4 trillion won and 195 trillion won, respectively. If the figures are finalized when the company announces its full earnings results on Oct. 29, they would represent year-on-year increases of 782.5 percent in operating profit and 126.6 percent in sales.

The operating profit surpassed brokerages’ consensus estimate of 106.64 trillion won, though sales fell slightly short of the 200.64 trillion won forecast.

The earnings are particularly significant as they exceeded expectations despite concerns that the Korean won's sharp appreciation against the U.S. dollar from the previous quarter would weigh on profitability.

“Despite an unfavorable business environment caused by the sharp appreciation of the Korean won, the company’s earnings were driven by its robust pricing strategy, which once again outperformed the industry average,” Meritz Securities analyst Kim Sun-woo said.

Samsung Electronics does not provide earnings estimates by business division in its preliminary guidance, but memory chips are widely seen as the main driver behind the record operating profit.

Analysts estimate that its memory business alone generated around 110 trillion won in operating profit. The full-scale contribution of sixth-generation high bandwidth memory 4 (HBM4) sales for Nvidia's next-generation Vera Rubin artificial intelligence (AI) platform is believed to be reflected in the earnings this quarter.

Conventional DRAM products are also believed to have performed strongly. Although DRAM price increases slowed from the previous quarter, prices continued to rise at double-digit rates, likely contributing to the earnings improvement.

In particular, the growing share of long-term agreements (LTAs), which can help cushion the impact of memory price cycles, is strengthening the sustainability of Samsung's earnings growth.

The company said during its second-quarter earnings call that LTAs were increasing, and analysts believe the trend continued in the third quarter.

“Supply constraints are expected to become more evident in 2027, intensifying competition to secure memory chips amid the race toward artificial general intelligence,” Kim said. “While some business-to-consumer applications, particularly smartphones, continue to resist price increases, memory chipmakers’ ongoing production shifts to server DRAM and HBM are forcing mobile memory customers to absorb price hikes.”

In contrast, the company’s Device Experience (DX) division, which handles finished products, is expected to post an operating loss for the second consecutive quarter.

According to market tracker IDC, global smartphone shipments fell 7.4 percent in the second quarter due to memory shortages. Kim expected third-quarter shipments to fall 8 percent quarter-on-quarter to 58 million units, noting that consumers are increasingly treating electronic devices as “durable goods” and replacing them less frequently.

Meritz Securities estimated that the DX division posted an operating loss of 2.64 trillion won, while SK Securities and Mirae Asset Securities projected losses of 1.9 trillion won and 1.1 trillion won, respectively.