flash
Memory chip sales blew Samsung Electronics revenues and profits way past analyst expectations in the Korean company’s second 2026 quarter.
Its record quarterly high revenues of ₩171.5 trillion ($118.7 billion) were up 130 percent Y/Y and 28 percent Q/Q as sustained high demand from GPU-building and AI-using customers met supply shortages with price rises the inevitable result. The all-time high operating profit of ₩89.5 trillion ($62 billion) was up a gigantic 1,812.4 percent on the year-ago ₩4.68 trillion ($3.4 billion) catapulted higher by price rises. The Device Solutions business unit, which makes memory chips, led the way, with revenues of ₩127.5 trillion ($88.2 billion), 357 percent higher Y/Y and 56 percent up Q/Q. The Memory Business part set an all-time high for quarterly revenue and operating profit as well. Memory bits are becoming gold-plated.
CFO Soon-Chul Park said: “said: “Building on our record first quarter performance, we delivered new highs in the second quarter for both revenue and operating profit, driven by our continued technology leadership in AI and ability to navigate changing market conditions.”
Samsung is benefitting from the same market conditions that have driven competitor SK Hynix revenues and profits to record highs.
For the Memory Business, server revenue achieved a record-high share of the sales mix with its HBM4 chips. It also shipped the industry’s first HBM4E samples to major customers, as well as shipping PCIe Gen6 and UFS 5.0 products. Other business units fared less well:
Samsung’s Device eXperience (DX) Division posted a QoQ sales decrease of 9%; a dismal comparison.
The System LSI Business was impacted by flagship seasonality and soft mobile demand in China, but expanded sales of high-volume mobile SoCs and image sensors, driving first-half revenue to a record high.
Earnings for the Foundry Business improved significantly
Samsung Display Corporation (SDC) posted KRW 7.5 trillion in consolidated revenue and KRW 0.7 trillion in operating profit for the second quarter.
The MX and Networks Businesses posted KRW 33.2 trillion in consolidated revenue and reported an operating loss of KRW 0.7 trillion.
The Visual Display (VD) and Digital Appliances (DA) Businesses posted KRW 14.5 trillion in consolidated revenue, and recorded a slight operating loss for the second quarter.
The earnings call revealed that both DRAM and NAND bit shipments both reached record highs, helped by AI server demand and higher prices. EVP, Head of Global Sales and Marketing Office for Memory, Jaejune Kim, said: ”Our ASP in the second quarter rose by mid 40 percent for DRAM and high 60 percent for NAND compared to the previous quarter.”
He noted: ”Up to now, market interest was more concentrated on DRAM rather than NAND. With the recent spread of agentic AI, we are now seeing strong demand growth for server SSDs across a broad range of segments, such as general purpose computing servers or dedicated storage servers for KV cache.”
There was some increase in output but not enough to offset the price rises; DRAM bit shipment increased by the low teens percentage compared to the previous quarter, exceeding it guidance. For NAND, bit shipments increased by low single digit percentage. Jaejune Kim said: ”Despite our efforts to increase production, our customers’ demand is outgrowing our supply.”
Samsung has signed long-term memory supply agreements - a 5-year term with potential annual extensions and substantial advanced payments - with the top 5 global datacenter customers who want supply dependability and stable pricing, and is in talks with 5 additional major accounts, and expects the number to increase. Samsung said: “These multi-year arrangements actually are aligned with our objective of hedging our mid to long-term risk, we have been engaging in discussions with customers, prioritizing those who can guarantee committed future captive demand.”
“Through this kind of approach, we expect to transition our business structure from one that was previously overexposed to supply-demand cycles to a more stable and predictable model.”
The company noted: “Almost all major customers are interested in asking for long-term supply, so it’s increasingly difficult to accommodate all of the requests given our available capacity. Initially, we intended to maintain flexibility in supply allocation and plan to allocate approximately 60-70 percent of our total capacity to long-term supply agreements while preserving sufficient capacity to support customers without multi-year contracts.”
Jaejune Kim pointed out: ‘We are also in talks with major customers on multi-year agreements to enhance the mid-to-long-term visibility of our NAND business as well.”
He discussed Samsung’s NAND roadmap: “We expect to take a leading position in the early market for next-gen, Gen 6 AI platforms, translating our technology leadership and solutions into tangible business results. On the QLC front, after completing development of our V9 two terabit QLC in March, we have since expanded our product lineup to include 256 terabyte high-capacity server SSDs. We also expect QLC bit shipments in the second half to more than double versus the first half. To prepare for the future, V10 V-NAND, featuring bonding and a three-stack architecture, is scheduled for mass production in August.”
Samsung is not now intending to set up share sales in the USA via an ADR arrangement as SK Hynix did with its US IPO.
Its mobile phone business is going all-in on AI, with VP of Mobile Ex[perience Daniel Araujo saying: “We are redesigning our system architecture into what we call an AI OS, where AI becomes the core of how the system operates. This evolves Galaxy AI into the foundation that integrates the whole mobile intelligence experience.”
For the second half of the year Samsung expects its Memory Business to enjoy “robust demand centered on servers stemming from continued AI infrastructure CAPEX and broader adoption of agentic AI. Meanwhile, growth in demand for server DRAM, eSSDs, and HBM is expected to accelerate. This is projected to keep the market undersupplied, despite partial demand moderation in mobile and PCs.” Jaejune Kim said: “We expect HBM4 sales to increase by more than three-fold quarter-over-quarter in the third quarter. Based on our outlook for the second half, HBM4 is expected to account for well over 60 percent of our total HBM revenue mix.”
Also: “Regarding the third quarter bit growth outlook, as inventory levels for both DRAM and NAND are significantly low, we expect Q/Q bit growth to be in the mid-single digit for DRAM and high single digit for NAND.”
The CFO said: “The supply constraints are expected to become even more severe in 2027 than 2026, reinforcing our view that the supply shortage will persist through 2028.” With new fabs taking 3+ years from starting construction to wafer output it will be 2029 before supply constraints might start to ease.
We could well expect further revenue and profit records to be set in Samsung’s next quarter as well as in this one. HBM is the gift that keeps on giving.