Samsung Posts 107 Trillion Won Operating Profit; Shares Fall

SEOUL, Oct. 29 — SamsungSamsung Electronics reported 107.4 trillion won of operating profit for the third quarter on Thursday, a record and in line with its forecast of Oct. 8, and said its chip division made 106.5 trillion won of it. Revenue was 195.3 trillion won, also a record.In DollarsAt 1,336.8 won to the dollar, the rate in Seoul at 3:30 p.m. on Thursday as Yonhap reported it, operating profit was about $80.4 billion, revenue about $146.1 billion and net profit about $56.2 billion.

Its shares fell 4.13 percent, to 232,000 won, after Samsung left most of this year’s payout to shareholders, 55 trillion to 75 trillion won, to a board meeting in late January. The lack of a detailed plan disappointed investors, Yonhap reported, and Seoul’s Kospi fell 1.24 percent, to 5,937.66.

The quarter shows who is paid for the build-out of artificial intelligence, and who pays. Samsung’s average DRAM price rose by about 20 percent from the second quarter, it said on its call, according to a transcript published by Investing.com. Its customers pay, its own phone business among them. The makers of chip-making tools stand to gain from its spending.

Operating profit rose 783.1 percent from a year earlier, and the chip division earned 99.1 percent of it, Yonhap reported. The exact figure, 107.44 trillion won in Samsung’s filing as Yonhap reported it, fell within its Oct. 8 range.The GuidanceSamsung gave its Oct. 8 forecast, “approximately 107.40 trillion” won, as the median of a range of 107.3 trillion to 107.5 trillion, because Korean disclosure rules do not allow a range. Its results are subject to an outside review, its presentation says. Memory revenue rose 16 percent from the second quarter, to 140.7 trillion won.

Net profit, 75.1 trillion won, fell short of the 87.01 trillion won that analysts had expected on average, by a Yonhap Infomax survey. Net finance costs came to 9.5 trillion won, against a gain of 4.7 trillion in the second quarter, by Samsung’s presentation, and weaker exchange rates cut operating profit by about 10 trillion won from the second quarter, Samsung said.

The Memory

Samsung’s sales of HBM4, the sixth generation of high-bandwidth memory, more than tripled from the second quarter, and HBM4 made up about 60 percent of its HBM sales, Yonhap reported. “We have actually achieved our goal of bringing HBM market share in line with our overall DRAM market share already in the third quarter,” Jaejune Kim, an executive vice president for memory, said, according to the transcript.

Samsung said its supply of high-bandwidth memory for 2027 is already sold out, at prices agreed with its customers, and that it expects tight supply to continue in 2028. “Yet, we continue to receive requests from key customers for additional supply,” Mr. Kim said.

It has signed multi-year supply contracts with 10 major customers, whom it did not name, and is negotiating with 10 more, Mr. Kim said, as Yonhap reported; SK hynix said on Wednesday that it had 14. Samsung aims to cover 60 to 70 percent of its production capacity with such contracts by 2030.

SK hynix expects demand to exceed supply through 2030. Samsung’s case for 2028, from the call: much of the industry’s added spending next year will go to acquiring new space, longer lead times on equipment may hold back capacity, and the shift to larger HBM chips will act as “a physical constraint on supply.” So it will secure clean rooms in advance and stay “flexible in terms of equipment installations” as it watches demand, it said.

Samsung expects its capital investment this year to reach about 84.4 trillion won, 76.8 trillion of it in chips, for “new fabs and other infrastructure.” “In 2027, the Business expects AI infrastructure capital expenditure to reach a historic level as the AI ecosystem expands,” the release said of the memory business.

In 2027, the Business expects AI infrastructure capital expenditure to reach a historic level as the AI ecosystem expands.

The Payout

The third-quarter dividend is 4,601 won a share, 30 trillion won in all. Of the 90 trillion to 110 trillion won that Samsung expects to return for 2026, the remaining 55 trillion to 75 trillion will include “a substantial share repurchase and cancellation program, along with cash dividends,” it said. Its previous record for a year’s returns was 20.3 trillion won, in 2020, Yonhap reported; even the low end of this year’s range is more than four times that.

“Investor sentiment weakened as the company did not present a detailed shareholder-return plan,” Lee Kyung-min, an analyst at Daishin Securities, said, as quoted by Yonhap. Samsung said it would consider adjusting the share of preferred stock in its buybacks, given “the growing market interest in the price gap between common and preferred shares.”The GapSamsung’s preferred shares closed Thursday at 183,900 won, down 3.26 percent and about 21 percent below the common shares, by Yahoo Finance’s figures.

Samsung’s common shares were up as much as 2.89 percent early on. Kim Seok-hwan, an analyst at Mirae Asset Securities, said they fell back once investors saw chip profit short of raised expectations, Yonhap reported, in Daily Cortex’s translation. SK hynix rose 2.62 percent, to 1,526,000 won, as its 20 trillion won buyback began. Kim Dong-won, head of research at KB Securities, wrote in a report that both companies’ shares stand at a discount comparable to the financial crisis, Yonhap reported.

Samsung’s phone business is among memory’s buyers. Its mobile and network businesses together lost 0.6 trillion won, their earnings down from a year earlier “due to cost pressures,” the release said; Yonhap tied the pressure to memory prices.

The Tools

KLA, an American maker of chip-inspection equipment, said on Wednesday that it expects the market for wafer equipment, including advanced packaging, to exceed $200 billion in 2027, a figure absent from its July shareholder letter. It now puts 2026 in the “mid-$150 billion range,” up from the “low $150 billion range” in July.KLABased in Milpitas, Calif., KLA reported revenue of $4.14 billion for the quarter to Sept. 30 and expects about $4.7 billion for the December quarter. Its shares closed Wednesday at $158.77, up 3.33 percent.

Memory makers took about 28 percent of KLA’s semiconductor process-control systems sales in the September quarter, up from about 21 percent in the June quarter, and are expected to take about 40 percent in the December quarter, mostly for DRAM. China was 34 percent of KLA’s revenue, up from 26 percent; KLA expects that share to fall. And the toolmaker pays for the shortage, too: the leverage it gains from growing, it said, is “being offset by persistently high memory costs for our system image processing requirements.”

Both companies have left their next large numbers to late January, when Samsung’s board is to settle the rest of its payout and KLA says it will have more to say about 2027.