By Hyunjoo Jin, Heekyong Yang and Joyce Lee
SEOUL, July 30 (Reuters) – Samsung Electronics said on Thursday it expects chip shortages to worsen and extend into 2028, after it posted a more than 250-fold jump in chip profit, countering investor concerns that feverish AI spending by major technology firms may slow and curb growth.
Shares in the world’s top memory chipmaker surged as much as 8% after it shared details about its long-term memory chip supply contracts with major tech firms and flagged a plan to turn around its loss-making foundry business “in the near future”.
“The supply shortage in 2027 is expected to worsen compared to this year, and it is expected to continue in 2028,” Jaejune Kim, executive vice president of Samsung’s memory business, told analysts on a call.
He said Samsung has signed long-term supply agreements with top five global data center firms and is nearing deals with five other large companies, without disclosing their names.
He said its long-term deals would last at least five years and account for 60% to 70% of its total capacity for the longer term, adding that they included upfront payments and floor pricing aimed at hedging the risks of its capital investments.
“Management’s commentary on the conference call was better than expected, and it was one of the more reassuring calls we’ve heard in quite some time,” said Ryu Young-ho, a senior analyst at NH Investment & Securities.
That follows a sharp slide in recent months, as chip stocks have lost momentum amid investor concerns about funding for the AI infrastructure buildout and competition from China that could put chip earnings under pressure.
“In H2 2026, the Memory Business expects robust demand centered on servers stemming from continued AI infrastructure capex and broader adoption of agentic AI,” Samsung said in a statement.
“This is projected to keep the market undersupplied, despite partial demand moderation in mobile and PCs.”
Samsung’s semiconductor division posted an operating profit of 89.2 trillion won ($61.7 billion) in the second quarter, up over 250-fold from a year earlier.
However, those surging chip prices hurt Samsung’s mobile division, which reported a 700 billion won loss, its first quarter in the red.
“The chips enriching one side of Samsung are now hurting the other, leaving the group more exposed than ever to memory pricing and the durability of hyperscaler demand,” said Josh Gilbert, an analyst at eToro.
Samsung reported operating profit of 89.5 trillion won ($61.98 billion) for the April-to-June period, in line with its estimate of 89.4 trillion won and up from 4.68 trillion won a year earlier.
The South Korean company’s revenue rose 130% to 171.5 trillion won in the quarter from a year earlier.
Samsung’s cross-town rival SK Hynix on Wednesday reported bumper quarterly results but fell short of lofty investor expectations. It flagged plans to raise capital spending this year by around 50% to meet surging AI demand.
($1 = 1,446.2700 won)
(Reporting by Hyunjoo Jin, Joyce Lee and Heekyong Yang; Editing by Miyoung Kim and Sonali Paul)
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