SEOUL ─ Samsung Electronics is expected to report a nearly nine-fold jump in third-quarter operating profit, driven by robust AI demand, though analysts have cut forecasts by nearly 8 percent since the end of August.
Despite moderating gains in the prices of memory chips and a strengthening South Korean won, the world's largest memory-chip maker is expected to post an operating profit of 106.1 trillion won ($79.1 billion) for the July-September quarter.
The LSEG SmartEstimate, based on forecasts from 21 analysts and weighted toward those with stronger track records, has been slashed by 7.7 percent since the end of August.
It will be up from 12.17 trillion won a year earlier for Samsung's fourth consecutive quarter of record operating profit, underscoring a prolonged memory shortage as demand for AI infrastructure outstrips supply growth.
Chipmakers expect the shortage, which began more than a year ago, to persist into next year and perhaps through 2028.
However, the pace of price increases slowed in the third quarter, fanning concerns that chip margins may have peaked and prompting questions about the durability of the AI spending boom.
Samsung will provide preliminary Q3 results on Thursday before detailed data is released in late October.
The moderation in memory prices is being closely watched by investors after a more than one-year-long rally fueled by AI-driven demand.
That rally propelled the world's largest memory producers Samsung, SK Hynix and Micron, to record profits and margins.
Rising cost burden
Higher chip prices have pushed up the cost of smartphones and consumer electronics, weighing on demand.
At the same time, long-term supply deals between chipmakers and customers have limited price gains in exchange for guaranteed supply.
TrendForce expects conventional DRAM contract prices to rise 10 percent to 15 percent in the fourth quarter from the preceding quarter, slowing from a second-quarter surge of roughly 60 percent.
"Although the market remains in a tight supply position, the pace of price growth is expected to decelerate," said Avril Wu, its senior vice president for research.
Suppliers are wary of further steep price increases that could hurt demand across a broad range of consumer electronics, Wu added.
"In addition, long-term agreements represent an increasingly higher proportion of suppliers' total output. With ceiling-price mechanisms built in, the rate of price increases has slowed down," Wu said.
Samsung's memory-chip operating profit margin is expected to reach 76 percent in the third quarter, flat with the preceding quarter, estimates by SK Securities analyst Han Dong-hee show.
It also faces growing competition from Chinese rivals, which remain concentrated in lower-end products but are benefiting from the AI-driven memory shortage.
"Our industry checks indicate that an increasing number of OEMs and ODMs are adopting Chinese DRAM and NAND," Kinngai Chan, senior research analyst at Summit Insights Group, said in a report.