Driven by the investment boom in AI infrastructure, Samsung Electronics Co., Ltd. (SSNLF) posted record-breaking third-quarter revenue and operating profit for the fourth consecutive quarter, with quarterly operating profit surpassing the 100 trillion won mark for the first time, though net profit fell short of market expectations.
On October 29, Samsung Electronics released its detailed financial report for the third quarter of 2026, showing operating profit of 107.44 trillion won, a massive 783% surge year-on-year and a 20% increase quarter-on-quarter, with the operating profit margin rising to 55%. Revenue reached 195.25 trillion won, up 127% year-on-year, setting a historic high and marking the fourth straight quarter of record revenue and profit.
However, net profit underperformed market expectations. Net profit came in at 75.21 trillion won, below the market estimate of 89.06 trillion won. The main drag came from non-operating items, with financial expenses of 9.5 trillion won in the third quarter pushing pre-tax profit down to 98.5 trillion won; combined with 23.4 trillion won in income tax, the company's final net profit margin was 38.5%, down from 41.8% in the second quarter.
The core driver of this earnings surge remains semiconductors, particularly AI-related memory products. Samsung's DS semiconductor business generated third-quarter revenue of 147.1 trillion won and operating profit of 106.5 trillion won, accounting for nearly all of the group's operating profit.
The memory business posted revenue of 140.7 trillion won, up 16% quarter-on-quarter and a staggering 427% year-on-year, mainly driven by the ramp-up of HBM4, strong server SSD demand, and across-the-board memory price increases.
Looking ahead, Samsung has provided a more aggressive capital expenditure plan: it expects capital spending of 84.4 trillion won for 2026, significantly higher than 52.7 trillion won in 2025, with chip capital expenditure accounting for approximately 76.8 trillion won, or more than 90% of the total.
The company also warned that as the AI ecosystem continues to expand, the chip supply shortage will further intensify next year.
Income Statement: Operating Margin Rises to 55%, but Net Profit Weighed Down by Financial Expenses
From an overall profitability perspective, Samsung's third quarter displayed typical characteristics of an AI upcycle.
Third-quarter revenue was 195.3 trillion won, up 127% from 86.1 trillion won in the same period last year; operating profit was 107.4 trillion won, a massive increase from 12.2 trillion won a year earlier. The company said this marks the first time a global technology company has achieved quarterly operating profit exceeding 100 trillion won.
On the gross margin front, third-quarter gross profit was 135.3 trillion won, with a gross margin of 69.3%, significantly higher than 38.9% in the same period last year. The operating profit margin was 55.0%, up 2.8 percentage points from the second quarter and more than 40 percentage points higher than 14.1% a year earlier.
Expenses remained relatively restrained. Third-quarter selling and administrative expenses were 27.8 trillion won, representing 14.2% of revenue, down from 24.8% in the same period last year; R&D investment was 14.4 trillion won, down 10% quarter-on-quarter but still up 63% year-on-year, indicating that Samsung continues to maintain high investment in AI chips, advanced processes, and next-generation displays.
However, net profit did not exceed expectations in tandem, with the key factor being financial expenses. Samsung's financial income/expense for the third quarter was negative 9.5 trillion won, compared with positive 4.7 trillion won in the second quarter. As a result, despite record operating profit, pre-tax profit was 98.5 trillion won and net profit was 75.1 trillion won, below market estimates.
Semiconductors: HBM4 and Server SSDs Become Earnings Engines
The most core growth source for Samsung in the third quarter was the DS division.
The DS business posted third-quarter revenue of 147.1 trillion won, up 15% quarter-on-quarter and 344% year-on-year; operating profit was 106.5 trillion won, an increase of 17.3 trillion won from the second quarter and 99.5 trillion won from the same period last year. Calculated by divisional revenue, the DS operating profit margin was approximately 72%, reflecting the price elasticity under AI memory supply shortages.
Among this, the memory business recorded revenue of 140.7 trillion won, up 16% quarter-on-quarter and 427% year-on-year. Samsung stated that amid capacity constraints, it proactively optimized its product mix and concentrated resources on AI-related products; at the same time, strong server demand drove memory price increases across all application areas.
HBM4 was the most important keyword this quarter. Samsung said it significantly expanded HBM4 sales through product competitiveness and proactively met growing server SSD demand. As AI training and inference clusters continue to expand, high-bandwidth memory, server DRAM, and enterprise-grade SSDs have become the most sought-after products.
Samsung also remains optimistic about the fourth quarter. The company expects AI infrastructure investment to continue being driven by global AI competition, with new-generation CPU/GPU platforms driving further memory demand growth; QLC SSD demand related to the expansion of personal AI Agent services will also rise rapidly. The company plans to continue increasing sales of HBM, server DRAM, and SSDs, and expand supply of high-speed server DDR5 and QLC SSDs.
Foundry and System LSI: Advanced Process Demand Recovers, Taylor Plant Comes into View
Beyond memory, Samsung's System LSI and foundry businesses also showed improvement.
On the System LSI side, third-quarter revenue growth was mainly driven by mass production of SoCs and image sensors in new models in the second half. The company also stated that it has secured custom SoC projects through new customer partnerships. In the fourth quarter, Samsung expects flagship SoCs and 200-megapixel sensors to maintain stable production and sales.
The foundry business benefited from advanced node demand. Samsung said third-quarter foundry revenue and profit improved significantly, mainly from HBM B-Die sales growth and expanded advanced process sales. The company also continued to secure 2nm HPC customer orders, including from large cloud service providers.
Looking ahead to the fourth quarter, Samsung expects foundry revenue to achieve double-digit growth and continue improving profitability, driven by second-generation 2nm mobile products, 4nm NPU production ramp-up, and expanded memory-related product sales.
By 2027, Samsung will focus on leveraging 4nm/2nm advanced nodes to capture AI/HPC demand while strengthening global supply capabilities. The company specifically mentioned that once its first wafer fab in Taylor, USA, begins operations, it will enhance its global supply capability for advanced processes.
Capital Expenditure Sharply Increased: Chip Investment Accounts for Over 90%
The most noteworthy forward-looking information in Samsung's latest earnings report is the significant expansion of its capital expenditure plan.
The company expects capital expenditure of 84.4 trillion won for 2026, an increase of approximately 60% compared with 52.7 trillion won in 2025; of this, chip capital expenditure is approximately 76.8 trillion won, accounting for about 91% of total capital spending.
This means Samsung is directing the vast majority of its investment resources toward semiconductors, especially AI memory, advanced processes, and server-related products. The third-quarter cash flow statement also showed that the company's purchases of property, plant and equipment amounted to 26.9 trillion won, a clear increase from 14.1 trillion won in the second quarter.
Samsung also judges that as the AI ecosystem expands, AI infrastructure capital expenditure will continue to accelerate in 2027, and AI-driven demand may cause supply shortages to further intensify compared with 2026. The company plans to lock in high-end market demand through technological leadership, product mix optimization, and long-term contracts.
Balance Sheet: Net Cash Approaches 200 Trillion Won, Ample Financial Firepower
Despite the sharp rise in capital expenditure, Samsung's balance sheet remains very solid.
As of the end of September, the company's total assets were 791.84 trillion won, continuing to grow from the end of June; cash and cash-equivalent assets were 214.82 trillion won. Debt during the same period was 17.19 trillion won, with net cash reaching 197.6 trillion won, higher than 167.6 trillion won at the end of June.
Leverage levels remain low. Samsung's debt-to-equity ratio was 29%, its debt-to-equity ratio was only 3%, and its net debt-to-equity ratio was negative 32%; the current ratio was 310%, further improving from 263% in the same period last year.
On the cash flow front, third-quarter operating cash flow was 98.6 trillion won, lower than 105.1 trillion won in the second quarter but still at a high level. Investing cash flow was negative 35.2 trillion won, including 26.9 trillion won in purchases of property, plant and equipment; financing cash flow was negative 24.0 trillion won, mainly including 12.5 trillion won in treasury stock buybacks, 2.5 trillion won in dividend payments, and a 4.6 trillion won reduction in debt.
Shareholder Returns: Third-Quarter Cash Dividend of 30 Trillion Won, Future Buybacks May Favor Preferred Shares
Samsung also updated its shareholder return plan.
The company plans to pay a total of 30 trillion won in cash dividends for the third quarter, with both common and preferred shares receiving 4,601 won per share. According to company disclosures, total shareholder returns for 2026 are expected to be between 90 trillion and 110 trillion won, of which 35 trillion won has already been planned or completed, and the remaining 55 trillion to 75 trillion won will be returned through cash dividends and large-scale share buybacks and cancellations.
Notably, Samsung specifically responded to market concerns about the price gap between common and preferred shares. The company stated that in future share buyback and cancellation plans, it will actively consider and adjust the proportion of preferred shares based on market conditions.
Samsung said the next round of shareholder return policy, as well as the final amount and specific execution plan for the remaining shareholder returns in 2026, will be finalized and announced at the board meeting at the end of January 2027.
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