Samsung's Record Quarter Just Undercut the AI Spending Skeptics

Samsung Electronics posted a second-quarter operating profit of 89.4 trillion won ($58 billion), up 1,810% year-over-year, driven by surging AI memory demand that lifted DRAM and NAND prices. The record profit undercuts Wall Street skepticism about AI spending, as data centers now consume 70% of global memory chips. Samsung also began commercial shipments of HBM4 and is sampling HBM4E to close the gap with SK Hynix in the high-bandwidth memory market.

Samsung just posted the kind of quarter that ends an argument. Operating profit jumped more than seventeenfold as AI memory demand overwhelmed supply, landing right as Wall Street was debating whether the AI trade had run out of road. Samsung just posted the kind of quarter that ends an argument. Operating profit jumped more than seventeenfold as AI memory demand overwhelmed supply, landing right as Wall Street was debating whether the AI trade had run out of road. Samsung Electronics said this week that it expects second-quarter operating profit of 89.4 trillion won, about 58 billion dollars, up 1,810 percent from a year earlier and 6.2 percent above the 84.16 trillion won analysts had penciled in, according to the Korea Herald. Revenue came in at 171 trillion won, up 129.3 percent. Those are not incremental improvements. That is a company that spent most of the last two years losing money in its chip division suddenly printing the most profitable quarter in its history. The driver is memory, and specifically the scramble for chips that feed AI servers. Average DRAM selling prices rose 44 percent quarter over quarter, while NAND prices climbed 53 percent, according to an Investing.com analysis of the results. Data centers now account for roughly 70 percent of all memory chips produced worldwide, per Real Investment Advice, and that is the real story behind Samsung's number. This is not only an HBM story anymore. AI workloads have spread far enough into ordinary computing that they are pulling up prices across the entire memory stack, conventional DRAM and NAND included. You do not get a number like that without the rest of the business bending to make room for it. Samsung's foundry division posted its first profitable month since 2023 in June, according to SammyGuru, but April and May losses likely kept the unit in the red for the quarter overall. Mobile fared worse. Samsung's device experience division, the one that makes Galaxy phones, is expected to post an operating loss of around 1 trillion won, about 653 million dollars, largely because the memory division is charging its own phone unit AI-era prices for the chips it needs. Frankly, that's an odd position for a company to be in. Its own semiconductor boom is now expensive enough to bruise its own phone business. Samsung says it began commercial shipments of HBM4 this quarter and is sampling HBM4E, the next rung up, to customers building AI accelerators. That timeline matters because HBM is where Samsung has been losing ground, not gaining it. SK Hynix holds roughly 57 percent of the HBM market, with Samsung at 22 percent and Micron at 21 percent, so a clean HBM4E ramp is less a victory lap for Samsung than a chance to close a gap a rival opened. The timing here is not an accident. Memory stocks had been whipsawing for weeks on fears that Google's efficiency gains in AI compute would cool demand for the chips underneath it, and Bank of America told clients the sell off was overdone, arguing that capex remains the ultimate proof point of AI spend, not efficiency headlines. Samsung's quarter is exactly the kind of hard number that argument needed. You can't wave away a 1,810 percent profit jump as sentiment. It also lands two days before SK Hynix prices the biggest thing happening in Korean tech right now. SK Hynix is selling 28.07 billion dollars in American depositary shares on Nasdaq under the ticker SKHY, with pricing due Thursday and trading starting Friday. Baillie Gifford, Coatue Management and Situational Awareness Partners have separately indicated interest in buying up to 7 billion dollars of the offering combined. The company plans to use the proceeds to build new fabs in South Korea and to buy ASML's extreme ultraviolet lithography equipment, the same scanners every advanced memory maker is short of. Samsung's earnings beat is the closest thing SK Hynix could ask for as a pricing tailwind this week, proof, days before the roadshow ends, that the demand underneath its own HBM lead is real and not a Nasdaq story running ahead of itself. Micron is making a similar bet, just on a longer clock. The company broke ground on July 4 on a 9.3 billion dollar expansion of its Hiroshima plant, with Japan's trade ministry chipping in up to 500 billion yen, and the new lines aren't expected to ship until around 2028. That is not a bet on this quarter. It's a bet that whatever is driving Samsung's number today still holds three years from now, once the current supply crunch has had time to work itself out and a new one has presumably taken its place. None of that resolves the underlying question of whether AI infrastructure spending can keep growing at its current pace forever. It can't, not indefinitely. But the three companies racing to build the memory behind it, Samsung, SK Hynix and Micron, are all betting billions that the current run has years left in it, not months. Also read: India and Japan team up to make Indian warships harder for China to detect https://startupfortune.com/india-and-japan-team-up-to-make-indian-warships-harder-for-china-to-detect/ • CISA Is Using Anthropic's Mythos to Audit Government Code Despite the Ban https://startupfortune.com/cisa-is-using-anthropics-mythos-to-audit-government-code-despite-the-ban/ • Anthropic's AI ban is over, but the lawsuit over it is not https://startupfortune.com/anthropics-ai-ban-is-over-but-the-lawsuit-over-it-is-not/