AI demand drives chip business, Samsung operating profit surges 783%

On October 29, Samsung Electronics announced its financial results for the third quarter of 2026: revenue of approximately 195.3 trillion won, up about 127% year on year; operating profit of approximately 107.4 trillion won, up about 783% year on year. This marks the fourth consecutive quarter in which Samsung has set new records for both revenue and operating profit.

Chips were the main driver behind these results. The semiconductor division's operating profit for the quarter reached 106.5 trillion won, accounting for about 99% of the company's total operating profit. On the other side, the mobile and network business, which is mainly focused on phones, saw revenue growth but still posted a combined loss of 600 billion won.

Chips earn the most, and price increases are not limited to HBM

Samsung's semiconductor division posted third-quarter revenue of 147.1 trillion won. Among this, the memory business set new records for both revenue and operating profit, with sales of the new-generation high-bandwidth memory HBM4 rising sharply and demand for server solid-state drives remaining strong.

HBM is high-bandwidth memory used together with AI chips and is one of the products Samsung is focused on expanding. As AI companies expand data centers, demand for server memory and solid-state drives is also increasing. Samsung said strong server demand combined with limited production capacity has pushed up prices for multiple types of memory products.

However, the pace of price increases has changed somewhat. On October 8, Yicai cited data from Sigmaintell saying that prices for various DRAM and NAND products continued to rise quarter on quarter in the third quarter, but the increases had narrowed, with some categories below 10%. Memory prices continue to climb, but not as fast as before.

Mobile revenue grows, but losses remain

On the mobile side, rising component prices have become a cost pressure.

Samsung's mobile and network business posted third-quarter revenue of 37.7 trillion won, growing both year on year and quarter on quarter. The launch of new flagship products such as foldables increased the share of high-end models in sales, improving this business's profitability compared with the previous quarter, but it still recorded an operating loss of 600 billion won.

Samsung attributed the year-on-year decline in mobile business profit to cost pressure. The network business faced other difficulties: lower sales in North America and reduced sales of high-margin software caused profit to fall both year on year and quarter on quarter.

With the same memory price increases, the chip division can sell at higher prices, while the mobile division has to bear higher component costs. Selling more high-end phones helps ease the pressure, but judging from the combined results of the mobile and network businesses, the increased revenue has not yet been enough to return them to profit.

The TV and home appliance businesses posted a combined loss of 200 billion won for the quarter. Samsung said that after major sporting events ended, TV revenue declined, and rising costs further squeezed profits; the home appliance business was affected by higher raw material and logistics costs, and growth in the enterprise customer business and subscription services was not enough to offset these pressures. Samsung Display remained profitable, with third-quarter revenue of 8 trillion won and operating profit of 1.1 trillion won.

Facing the year-end sales season, Samsung plans to focus on selling the Galaxy

S26 series and new foldables and other flagship products, while also improving operational efficiency. The TV and home appliance businesses also plan to increase sales of high-end products to ease the squeeze on profits from rising costs.

Most capital expenditure still goes to chips. Samsung's third-quarter capital expenditure was 29 trillion won, of which 27.2 trillion won went to the semiconductor division; full-year capital expenditure is expected to be about 84.4 trillion won, with the semiconductor division accounting for 76.8 trillion won. Infrastructure construction such as new factories will be used to meet demand for AI and high-performance computing.