Samsung forecasts $80bn profit as AI lifts chips

Samsung Electronics forecast third-quarter operating profit of 107.4 trillion won, or $80.1 billion, saying high memory chip prices during a global supply shortage lifted its results as demand from artificial intelligence data centres grows.

The South Korean company said operating profit for July to September was expected to rise 782.5 percent from a year earlier. It forecast revenue of 195 trillion won, up 127 percent.

Samsung said both figures would be all-time highs and would extend its records for sales and operating profit to a fourth consecutive quarter. It is expected to release its final quarterly earnings report at the end of October.

Samsung is the world's largest maker of memory chips. It, SK hynix and Micron dominate the global market for high-bandwidth memory chips used in AI data centres alongside other powerful semiconductors.

Analysts at Shinhan Securities said in a note last week that they expected stronger Samsung earnings next year as the company increases production of HBM4, a new generation of high-bandwidth memory chips. They said the shift could give Samsung scope to renegotiate prices and support margins.

Higher demand has also raised prices for DRAM and NAND flash used in smartphones, increasing costs for Samsung's mobile division, analysts said.

Samsung announced in August a buyback of up to $80 billion of its own stock. The company said the shareholder return plan was intended to ensure that growth benefits reach shareholders.

The profit boom has also increased pressure from workers seeking a bigger share. Samsung avoided a strike in South Korea earlier this year by agreeing to distribute bonuses equal to 10.5 percent of operating profit to semiconductor employees. About 78,000 employees are eligible for a bonus estimated at roughly $370,000 this year, based on a market estimate of profits.

In Taiwan, union representatives said Wednesday that hundreds of workers at a Micron plant had voted in favour of a strike after talks with the US company over bonus reforms collapsed.