Samsung Forecasts $66 Billion Profit Surge by 2026 Amid Chip Demand

Samsung Electronics is poised for a substantial increase in its operating profit, projected to reach $66 billion by 2026, according to a report from South Korean brokerage house KB Investment & Securities. This surge is primarily driven by robust global demand for memory chips, particularly in the artificial intelligence sector.

In the first nine months of 2023, Samsung reported an operating income of $16 billion. KB Investment forecasts that the company’s earnings will exceed $13 billion in the fourth quarter alone, with its semiconductor division expected to contribute nearly 80% of total earnings during this period.

Memory Chip Prices and Market Trends

The increase in profitability is largely attributed to rising prices for general-purpose memory chips, which have surged by over 50% this month. Kim Dong-won, head of research at KB Investment, indicated that Samsung could achieve a record operating profit of around $14 billion in the fourth quarter. He noted the likelihood of Samsung’s new high-bandwidth memory, HBM4, receiving quality certification ahead of schedule this year, further enhancing the company’s competitive edge.

Historically, Samsung has trailed its local rival SK hynix in the high-bandwidth memory market, which plays a crucial role in supercomputers and AI applications. However, Samsung has been narrowing this gap and has started producing HBM3E. During a recent conference call, the company confirmed that Nvidia is currently testing the next-generation HBM4 for a potential collaboration.

Stock Market Response and Future Plans

As a result of these promising projections, Samsung’s shares rose by 3.52% on the Seoul stock exchange on November 26, 2023. KB Investment’s Kim also suggested that a portion of the increased operating profit could be allocated for share buybacks, aiming to boost the stock price through cancellation of shares.

The anticipated growth in profits not only reflects Samsung’s strategic positioning in the semiconductor market but also highlights the increasing reliance on advanced memory solutions across various technology sectors. With the company making significant strides in product development and market competitiveness, Samsung is well-positioned to capitalize on the booming demand for memory chips in the coming years.