Samsung posts record profit as chip revenue rises nearly 50-fold

Samsung reported record quarterly profit: the main contribution came from its memory and chips division, which increased operating profit nearly 49 times amid the AI frenzy. At the same time, the company warned that the global memory shortage is not easing and, by its estimates, could intensify as early as 2027.

Record profit surge

From January to March, operating profit of Samsung's chip division reached a record 53.7 trillion won compared to 1.1 trillion a year earlier. This accounts for almost 94% of the company's total quarterly operating profit, which was 57.2 trillion won. Overall quarterly revenue grew 69% year-over-year to 133.9 trillion won.

For Samsung, this is not just a strong report, but an indicator of how quickly AI demand is reshaping the semiconductor market economy. The market reacted as expected: Samsung shares have risen 88% since the beginning of the year, significantly outpacing the broader market. An additional boost came from the position of major U.S. tech companies. Earlier, Alphabet, Amazon, Meta and Microsoft made it clear again that they do not intend to cut spending on AI infrastructure. For Samsung, this means not a one-off spike, but a long wave of demand, for which the company is already preparing to sharply increase capital expenditures in 2026.

Why the shortage is growing

The main reason is the boom in AI datacenter construction. Memory and logic manufacturers are increasingly redirecting capacity to more complex chips needed for Nvidia accelerators and similar systems. The problem is that these same production lines, personnel and materials are no longer working at the previous volume of standard memory and regular components needed for smartphones, displays and other electronics. Because of this, bottlenecks emerge not only in premium GPU clusters, but throughout the entire memory supply chain.

"Our supplies are falling far short of customer demand."

Samsung openly states that the gap between demand and supply will persist for a long time. According to company executives, based on current orders alone, it is clear: in 2027 the shortage could be even deeper than in 2026. To lock in volumes, customers are signing multi-year binding contracts, and Samsung itself warns that it will not be possible to quickly ease the tension. The timelines for bringing new factories online are too long for the market to quickly absorb the surge in orders.

• Building new factories takes years, not quarters
• Memory purchases for AI servers are driving demand
• Multi-year contracts reserve future volumes in advance
• Shortage of premium memory pushes prices up for ordinary chips as well

Pressure on the rest of the business

Paradoxically, the record in the chip business does not mean that Samsung is doing equally well across all directions. Rising prices for ordinary components are already hitting other company segments. Samsung warned that the profitability of its mobile and network division will decline in 2026 because component costs are rising faster than the company can pass these costs on to customers.

In other words, money earned on AI chips is partially eaten up by the rising cost of its own electronics. In the first quarter, mobile and network business profit fell 35%, to 2.8 trillion won.

The display division, which supplies panels including to Apple, showed a 20% decline in operating profit, to 400 billion won. The company also separately noted risks of rising logistics costs due to rising oil prices, although the Middle East conflict has not yet disrupted actual production: inventories and diversification of industrial gas supplies, including helium, helped.

What this means

The AI frenzy is already affecting not just the revenue of individual companies, but the entire balance of the global chip market. While money and capacity are flowing into memory for datacenters, shortages will continue to pressure more mass-market electronics and push prices upward. For the market, this is a signal that the AI boom is far from saturation, and for manufacturers, that the fight for capacity and long-term contracts is only intensifying.