Samsung's AI Chip Surge Drives Record-Breaking Profit Forecasts

Samsung's semiconductor division, fueled by soaring AI memory chip demand, may earn nearly as much in Q1 2026 as it did in all of 2025, while other units face challenges.

An unprecedented surge in demand for artificial intelligence memory chips is propelling Samsung Electronics' profitability to unprecedented heights. Market experts now anticipate the South Korean tech giant could generate nearly as much operating profit in a single quarter as it did throughout the entire previous year. This remarkable performance, however, is concentrated in its semiconductor division, while other business units face significant headwinds.

Unprecedented Earnings Projections

Analysts have dramatically revised their forecasts upward for the first quarter ending March 2026. The consensus estimate points to an operating profit of 40.5 trillion won (approximately $26.9 billion). Some institutions, including Meritz Securities, project a figure as high as 53.9 trillion won. For context, the company's full-year operating result for 2025 stood at 43.6 trillion won.

This explosive growth is fueled by insatiable demand for High-Bandwidth Memory (HBM) and standard DRAM chips required for AI infrastructure. Average selling prices for DRAM and NAND flash memory soared by 87% and 79% respectively compared to the preceding quarter. Consequently, the semiconductor segment now dominates the company's financials and is expected to contribute roughly 90% of the total profit.

Divergent Performance Across Business Units

In stark contrast to the booming chip business, Samsung's foundry division continues to struggle. Despite securing a partnership with Nvidia, this unit is projected to post a loss of around one trillion won. The mobile devices and display sectors are also underperforming. Rising costs for components and energy are likely to trigger a profit decline of approximately 50% in these areas.

External Risks and Technological Shifts

Beyond these operational challenges, investors are monitoring external risks. The Iran-Israel conflict triggered a sector-wide pullback in share prices in early March, raising concerns about persistent inflation driven by expensive energy. Furthermore, a potential strike by local labor unions looms in May 2026 over a dispute concerning bonus payments.

On the technological front, Google's new "TurboQuant" software has sparked industry debate. The technology reduces the memory requirements for AI applications. Paradoxically, sector specialists suggest that lower operational costs could lead to even more intensive AI adoption, ultimately driving greater long-term demand for memory solutions.

Resilient Market Performance and Bullish Outlook

Despite geopolitical turbulence, Samsung's equity has demonstrated resilience. The share price closed at 186,200 won yesterday, marking a yearly advance of about 50%. Major financial institutions maintain an exceedingly optimistic view of the coming months. Citigroup recently raised its price target to 300,000 won. Meritz Securities forecasts a record annual operating profit of 321.7 trillion won for the full year 2026, underpinned by anticipated long-term supply contracts for premium memory chips.