Samsung’s chip business rebounds from severe recession with profits soaring 160%

Samsung Electronics reported a recovery in revenue on Thursday, with operating profit more than doubling from the previous quarter due to strong chip business.

Below is a comparison of Samsung’s third quarter results with the LSEG SmartEstimate, which emphasizes more consistently accurate analyst forecasts.

Revenue: 86.1 trillion Korean won ($60.5 billion) vs. 85.93 trillion won Operating profit: 12.2 trillion won vs. 11.25 trillion won

The South Korean tech giant’s quarterly revenue increased by 8.85% year-on-year, and its first-quarter operating profit increased by 32.9% year-on-year.

Samsung shares soared nearly 4% in early Asian trading.

The profit marks a recovery from the June quarter, which was weighed down by a major slump in Samsung’s chip business. Operating profit increased by 160% compared to June, and sales increased by 15.5% over the same period.

Samsung Electronics is South Korea’s largest company by market capitalization and a leading provider of memory chips, semiconductor foundry services, and smartphones.

Samsung’s chip business reported a 19% increase in sales compared to the June quarter, with the memory business posting record quarterly sales, driven by strong demand from artificial intelligence.

Operating profit for the third quarter also exceeded Samsung’s own forecast of approximately 12.1 trillion Korean won.

Samsung Electronics’ chip business’ operating profit for the third quarter was 7 trillion Korean won, an 81% increase from the same period last year and more than 10 times the previous quarter.

Chip revenue increased by 13% from the previous year to 33.1 trillion won.

Samsung’s chip business, also known as the Device Solutions division, includes memory chips, semiconductor design, and foundry divisions.

The segment benefited from a favorable pricing environment and posted record quarterly sales due to increased sales of high-bandwidth memory (HBM) chips, a type of memory used in artificial intelligence computing.

Samsung finds itself lagging behind memory rival SK Hynix in the HBM market after delays in winning big contracts with leading AI chip companies. Nvidia. However, there is a bright spot for the company, which reportedly passed Nvidia’s certification tests for its advanced HBM chip last month.

A report by Counterpoint Research earlier this month found that Samsung regained the top spot in the memory market in the third quarter, overtaking SK Hynix, after falling behind its competitors for the first time in the previous quarter.

MS Hwang, research director at Counterpoint Research, told CNBC that Samsung’s third-quarter performance was a clear result of the broader “memory market boom,” as well as rising prices for general-purpose memory.

Samsung said that its memory business will focus on mass production of HBM4, the next generation HBM technology, toward 2026.

Samsung’s Mobile Experience and Networks business, which develops and sells devices such as smartphones, tablets and wearables, reported both sales and profits increased.

The division’s operating profit for the third quarter was 3.6 trillion won, an increase of about 28% from the same period last year.

The company said revenue was driven by strong sales of its flagship smartphones, including the launch of the Galaxy Z Fold 7 device.

Samsung predicted that rapid growth in the AI ​​industry will open up new market opportunities for both its device and chip businesses this quarter.