Samsung Sees Brand Growth Through AI Chip Production

AI hardware requirements push South Korean manufacturer past US$1tn valuation as component pricing climbs

Samsung Electronics reported a forecast for second-quarter operating profit of ₩89.4tn (US$58.4bn) between the start of April and the end of June. The figure represents a 19-fold increase from the ₩4.7tn (US$3.1bn) reported during the same period last year.

The South Korean manufacturer crossed the US$1tn market capitalisation threshold in May 2026. Micron and SK Hynix, its direct competitors in memory chip production, reached the same valuation milestone during the same period. All three memory chip manufacturers reaching this valuation at the same time reflects the surge in demand created by AI applications.

Samsung Electronics produces memory chips required for data centre operations and gen AI infrastructure.

The company's third consecutive record quarterly operating profit could show how hardware manufacturers are positioned to benefit from increased spending on AI components. This comes as many tech companies accelerate their infrastructure investments to support large language models and machine learning applications, creating sustained demand for specialised memory solutions.

Revenue rose 129% year on year to around ₩171tn (US$111.7bn) during the quarter, more than double the amount recorded for the same period last year. The revenue performance reflects both volume increases and higher average selling prices across the company's memory product portfolio.

Product demand shifts market dynamics

Samsung Electronics released its earnings guidance ahead of its full report due later in July. The preview follows a period where demand for semiconductors has outpaced available supply, creating an imbalance that has pushed market prices higher.

According to Citi Research, average selling prices for DRAM and NAND increased 44% and 53% quarter on quarter respectively. Samsung Electronics raised the prices of its memory chips during this period. The pricing power demonstrates how supply constraints have shifted market dynamics in favour of manufacturers.

Marc Einstein, Industry Analyst at Counterpoint Research, says to BBC the projected earnings mark one of "the best quarterly performances ever". He adds that the performance is close to the tech sector record set by NVIDIA earlier this year, saying that, "this has everything to do with the AI boom as memory companies continue to ride a tidal wave driven by limited supply and unprecedented demand".

Greater pricing power

Samsung Electronics is scaling up manufacturing of high-bandwidth memory (HBM), a component required for gen AI applications. The company has reallocated production capacity toward building these high-performance, vertically stacked chips.

This reallocation has reduced market availability of standard storage components. Memory chip prices continued to climb during the quarter as spending on AI infrastructure extended into conventional DRAM and NAND products. The ripple effect has created pricing pressure across consumer electronics and enterprise computing segments that rely on standard memory configurations.

According to research firm IDC, demand for data centres and AI infrastructure differs from previous patterns in the memory industry. This has impacted the supply of chips used in everyday electronics.

The high-bandwidth memory chips deliver faster performance and lower power consumption than standard components. They are integrated with AI processors, creating higher barriers to entry and giving suppliers greater pricing power compared to standard memory products.

Wage agreement impacts margins

Samsung Electronics achieved its profit forecast after setting aside funds for worker bonuses. The company agreed to a wage deal in May linking employee pay to operating profit following union worker strikes.

According to analysts speaking to Reuters, without those provisions operating profit would likely have exceeded ₩100tn (US$65.4bn). Losses at its foundry and logic chip businesses are likely to widen because bonus expenses are allocated across the entire semiconductor division.

Supply shortages and high-bandwidth memory demand continue to support pricing for memory chip manufacturers. Market observers are monitoring whether tech companies will sustain current spending levels on AI data centres as the sector enters its next phase of development.