Samsung Sees Chip Scarcity Extending to 2028, Touts Lengthy-Time period Provide Offers

Samsung Electronics on Thursday reported a greater than 250-fold bounce in chip revenue and introduced multi-year provide offers with main knowledge centre operators, saying it expects world chip shortages to turn out to be extra acute and lengthen into 2028.

The bullish outlook from the world’s largest reminiscence chip maker nonetheless did not ease investor considerations about expertise companies’ hefty AI infrastructure spending curbing progress.

Samsung inventory ended down 0.7 p.c after rising as a lot as 8.4 p.c, although it fared higher on the day than cross-town rival SK Hynix which ended down 5.6 p.c.

“The chip narrative has weakened. Investors are questioning how long their record-high margins will be sustainable,” stated market analyst Kim Seok-hwan at Mirae Asset Securities, after Samsung’s chip unit booked a report 70 p.c working revenue margin.

The South Korean conglomerate has signed provide agreements with the 5 largest world knowledge centre companies and is nearing offers with 5 different main gamers, it stated with out figuring out them.

“Almost all customers are requesting multi-year supply contracts,” Jaejune Kim, govt vice chairman of Samsung’s reminiscence enterprise, instructed analysts on an earnings name.

Samsung goals to safe contracts overlaying about two-thirds of its reminiscence output over the long run, Kim stated, becoming a member of rival efforts to cut back publicity to boom-and-bust cycles.

The offers will final at the very least 5 years and usually embrace upfront funds and ground pricing geared toward hedging the chance of capital funding, Kim stated.

The feedback come after a selloff in chip shares in latest months as a consequence of investor considerations in regards to the mounting value of AI infrastructure and competitors from China that would squeeze earnings.

Meta Platforms booked a 91 p.c drop in second-quarter free money stream on Wednesday, after Alphabet final week reported its first cash-flow-negative quarter.

A 250-Fold Profit Surge

Samsung’s semiconductor unit posted working revenue of KRW 89.2 trillion ($61.7 billion) within the second quarter, up greater than 250-fold from a 12 months prior. The group’s working revenue rose to KRW 89.5 trillion, consistent with its earlier estimate.

Overall income rose 130 p.c to KRW 171.5 trillion.

However, surging chip costs harm Samsung’s cell division, which reported its first quarter within the pink with a KRW 700 billion loss.

“The chips enriching one side of Samsung are now hurting the other, leaving the group more exposed than ever to memory pricing and the durability of hyperscaler demand,” stated analyst Josh Gilbert at eToro.

Samsung’s quarterly revenue surpassed its mixed earnings over the previous three years, serving to carry web money to KRW 167 trillion as of June-end and fuelling expectations for elevated shareholder returns. Its inventory has dropped almost 40 p.c over the past month however continues to be up 72 p.c to this point this 12 months.

Chief Financial Officer Park Soon-cheol stated Samsung is “in active discussion” over particular dividends and different facets of its shareholder return program for this 12 months.

“We remain fully committed to delivering on the program as promised and will provide for the update very soon,” he stated.

“Although the management did make some positive comments on shareholder returns and demand outlook, it seems due to high volatility investors are fleeing the market,” stated Sanjeev Rana, head of analysis at CLSA Securities Korea.

Sharp Turnaround

The earnings signify a turnaround for Samsung because the agency positive aspects floor on SK Hynix in supplying excessive bandwidth reminiscence (HBM) chips utilized in AI processors.

Samsung, which counts Nvidia and Advanced Micro Devices amongst its HBM clients, expects HBM4 income to greater than triple within the third quarter. It stated that may assist deliver its HBM market share consistent with that of its dynamic random entry reminiscence (DRAM) chips within the second half.

The firm additionally stated its foundry enterprise, which competes with TSMC and Intel, is prone to flip round “in the near future” pushed by rising manufacturing unit utilisation charges and chip costs.

It stated it’s on observe to start out operations at its Taylor fabricating plant within the US state of Texas this 12 months and that it goals to interrupt floor on a second fab which might begin mass manufacturing in 2030.

SK Hynix on Wednesday reported bumper quarterly outcomes but fell wanting investor expectations. It flagged plans to lift capital spending this 12 months by round 50 p.c to satisfy AI demand.

The agency issued American depositary receipts (ADRs) and debuted on the US market this month. Samsung will not be contemplating following go well with, Park stated.

Samsung has no use to lift funds given the steady money era from its diversified enterprise portfolio, Park stated.

© Thomson Reuters 2026