[Edaily Reporter SOYEON KIM ] SamsungElectronics has tentatively reported an operating profit of 107.4 trillion won for the third quarter of this year, with its semiconductor division alone estimated to have generated profits of 110 trillion won. Analysts attribute this profitability to rising memory prices—which exceeded the industry average—despite an unfavorable business environment caused by the sharp appreciation of the Korean won.

In particular, HBM4—a sixth-generation high-bandwidth memory (HBM) whose mass production began in the second half of this year—is emerging as a key driver of earnings growth for next year. As SamsungElectronics, which possesses both memory and foundry capabilities, expands its supply of HBM4, profitability improvements centered on high-value-added products are expected to accelerate.

◇ First Semiconductor Company to Reach $100 Billion in Revenue
On the 8th, SamsungElectronics announced that its consolidated operating profit for the third quarter of this year was preliminarily estimated at 107.4 trillion won. This represents a 782.50% increase year-over-year and a 20.01% increase quarter-over-quarter. Revenue reached 195 trillion won, up 126.59% year-over-year.

With these results, SamsungElectronics became the first company in the semiconductor industry to surpass $100 billion in quarterly revenue. This is also the first time a South Korean company has exceeded 100 trillion won in quarterly operating profit. It is a record that is difficult to find even among global Big Tech giants such as Apple and NVIDIA. Saudi Aramco, the state-owned oil company of Saudi Arabia, previously recorded an operating profit of $86.5 billion (approximately 116 trillion won) in the second quarter of 2022, when international oil prices surged due to the Russia-Ukraine war.

Analysts estimate that SamsungElectronics’ semiconductor (DS) division generated approximately 110 trillion won of the company’s third-quarter operating profit. They analyze that the high-profit structure of the memory business has been further strengthened as the operating leverage effect from rising DRAM and NAND flash prices was maximized.

Kim Seon-woo, an analyst at Meritz Securities, said, “We expect the DS division to have generated 110 trillion won in operating profit, with the memory segment accounting for 111.9 trillion won of that,” adding, “We anticipate a loss of 1.9 trillion won in the non-memory segments—System LSI and Foundry.”

He continued, “As the market leader, SamsungElectronics continues to demonstrate pricing leadership in DRAM and NAND compared to its competitors, based on the pricing power it has accumulated through numerous industry cycles in the past.”

◇ Operating Profit of 111.9 Trillion Won from Memory Alone… MX Division Sees Widening Losses
Even within the semiconductor division, performance is expected to have varied by business segment. While the memory business posted record-high profits, non-memory businesses—such as System LSI and foundry—are estimated to have continued posting losses. The non-memory division is projected to have recorded a loss of around 1 trillion won.

Although foundry utilization rates are improving as part of efforts to strengthen memory competitiveness, analysts believe that initial cost burdens associated with the launch of the Taylor, Texas, plant likely impacted profitability.

The Device Experience (DX) division, which handles finished products, is also expected to have posted a loss for two consecutive quarters due to cost pressures resulting from soaring component prices. The securities industry estimates that the Mobile Experience (MX) and Network divisions incurred operating losses of between 1.5 trillion and 1.8 trillion won. The Visual Display (VD) and Home Appliances (DA) divisions may also have posted losses of approximately 500 billion won.

Samsung Display is estimated to have achieved operating profit of around 1 trillion won, while Harman is estimated to have achieved operating profit in the range of 200 to 400 billion won.

◇ Full-Scale Expansion of HBM4 Supply Begins… Earnings Growth Forecast for Next Year
SamsungElectronics’ earnings growth is expected to continue into next year. The securities industry forecasts next year’s annual operating profit at 554.1 trillion won and revenue at 957 trillion won. This represents an increase of approximately 49.8% compared to this year’s projected annual operating profit of 369.7 trillion won.

HBM4 is cited as the key growth driver. SamsungElectronics is ramping up HBM4 supply in earnest in the second half of this year. With HBM4 set to be integrated into NVIDIA’s next-generation artificial intelligence (AI) accelerator, “Vera Rubin,” related demand is expected to expand rapidly.

In particular, SamsungElectronics is expected to benefit from the expansion of the HBM4 market given that it possesses both memory and foundry capabilities. Since HBM4 requires not only memory performance but also design and manufacturing technologies for integrating logic onto the base die, the synergy between these two businesses is expected to serve as a competitive advantage.

Profitability is also expected to improve significantly as the sales share of high-value-added memory products, including HBM4, increases. Market research firm TrendForce forecasts that the average selling price (ASP) of HBM will rise by 121% next year compared to this year—more than double this year’s level.

Prices for general-purpose memory are also continuing to rise. TrendForce forecasts that DRAM contract prices in the fourth quarter of this year will increase by 10–15% quarter-over-quarter, while NAND flash prices will rise by 15–20%. With the expansion of HBM supply coinciding with rising general-purpose memory prices, there is growing confidence that SamsungElectronics’ semiconductor profitability will remain at a high level next year as well.

An industry official stated, “HBM4 will play a very important role in the memory industry next year,” adding, “While prices for general-purpose DRAM surged this year, next year will see a sharp rise in HBM prices, and the growth engine of the memory industry will shift to HBM.”