Samsung's record $80bn quarter, and its phone problem

Samsung Electronics expects to report an operating profit of about 107.4 trillion won for the third quarter, on sales of about 195 trillion won, according to preliminary guidance released in Seoul on 8 October. That is nearly nine times the 12.17 trillion won it earned a year earlier, and up from 89.49 trillion won in the second quarter. Reuters, in a report republished by WIXX, put the figure at $80.17 billion and said it was the first time a technology company had topped 100 trillion won in a quarter, and the highest quarterly profit for any tech company. By comparison, The Korea Herald noted that Nvidia reported $63.7 billion in operating profit for its quarter ended in July.

The result came in slightly ahead of an LSEG SmartEstimate of 106.1 trillion won and was Samsung's fourth straight quarter of record operating profit, Reuters reported, as AI infrastructure spending outpaced memory supply and drove chip prices sharply higher. Samsung did not break out results by division; detailed figures are due on 29 October. According to SamMobile, Samsung is already selling HBM4 high-bandwidth memory to Nvidia and has reportedly received Nvidia's quality approval for HBM4E chips intended for the Rubin Ultra platform.

A record quarter, and a phone business in the red

The same memory price surge is weighing on Samsung's devices. Brokerages estimate its mobile and networks businesses lost between 900 billion won and 1.9 trillion won in the quarter, The Investor reported, after a 700 billion won operating loss in the second quarter. SamMobile put the mobile unit's estimated loss at about 1.5 trillion won (about $1.11 billion) and the combined loss at the Foundry and System LSI chip businesses at about $743 million. Reuters said analysts expect a mobile loss of more than $1 billion. All of these are analyst estimates, not company figures.

Samsung has started raising prices. It increased the price of the seven-month-old Galaxy S26 lineup by nearly 150,000 won in Korea and by $100 to $200 in the United States, The Investor reported. The Chosun Ilbo reported increases of 149,600 won on 256GB and 512GB models from 1 October. In July, co-CEO Roh Tae-moon told reporters in London that "we will not pass the full (cost) increase on to consumers." The new Galaxy Z8 foldables later drew a record 1.44 million preorders in Korea. With memory shortages expected to persist into 2027, The Investor questioned when the Galaxy business can return to profit without raising prices further.

Samsung also plans to make fewer phones. Citing industry sources, MoneyToday reported that Samsung's mobile division has asked partners to cut supply volumes by 20 to 30 per cent and that fourth-quarter smartphone production could fall by up to 30 per cent. On that basis, full-year output would come in at the low 200 millions, down from earlier expectations of up to 270 million.

Investors look past the record

Samsung shares slipped 0.2 per cent in early trade, against a 0.5 per cent drop in the Kospi, and remain more than 25 per cent below their June record, Reuters reported. The stock closed down 1.86 per cent while the Kospi fell 2.62 per cent, The Korea Herald reported. "The market's focus has shifted to whether the sharp earnings growth that started a year ago would be sustainable," Kim Seok-hwan, a market analyst at Mirae Asset Securities, told Reuters. Analysts expect fourth-quarter profit to grow 8.2 per cent from the third quarter, slower than the 20 per cent sequential growth just reported, as chip price gains moderate.

Samsung and Micron expect the supply imbalance to persist into 2028, Reuters reported, but Chinese competition and a possible slowdown in AI spending pose risks to the longer-term outlook. Analysts have also trimmed forecasts because the won's sharp appreciation reduces the value of dollar-denominated sales.