Strong AI-driven demand and advances in next-generation memory technology have placed South Korea's two chipmaking giants, Samsung Electronics Co., Ltd. and SK hynix, at the heart of a global semiconductor supercycle. With their third-quarter earnings reports approaching, the results will serve as a critical litmus test for the durability of the "AI trade" in global markets.
Market expectations for both giants are currently extremely high. According to data from FnGuide, Samsung Electronics Co., Ltd. is projected to post third-quarter revenue of 199.1 trillion won and operating profit of 105.6 trillion won, while SK hynix is expected to report revenue and operating profit of 94.1 trillion won and 74.1 trillion won, respectively. Combined operating profit for the two companies could approach a record 189.9 trillion won, a direct reflection of the strong market momentum fueled by the current chip supply shortage.
Yet beneath these dazzling headline figures, consensus estimates have recently undergone subtle adjustments. Over the past three months, analysts have trimmed revenue and profit forecasts for Samsung Electronics Co., Ltd. by 2.6% and 4.4%, respectively, and cut projections for SK hynix by 5.3% and 5%. This latest shift is primarily attributable to the stronger Korean won shrinking dollar-denominated sales rather than any downturn in the memory market itself, but it is enough to prompt the market to reassess the direct impact of currency fluctuations on the short-term performance of tech giants.
Beyond the surface-level magnitude of the numbers, the upcoming third-quarter reports will convey deeper signals to the market. Investors are closely watching the sustainability of memory chip price increases, the profit-locking effect of long-term agreements (LTAs), and whether next-generation high-bandwidth memory can genuinely translate into bottom-line profits, in order to judge whether the current boom is a fleeting surge or a structural shift with long-term resilience.
Memory Price Momentum Eases, Long-Term Agreements Cushion Volatility
The sharp rise in average selling prices (ASPs) for DRAM and NAND flash in the second quarter was the primary engine behind the two companies' strong performance.
Entering the third quarter, the market expects prices to continue rising but at a slower pace. According to Mirae Asset Securities, Samsung Electronics Co., Ltd.'s third-quarter DRAM ASP is forecast to climb 16.5%, but the increase is expected to narrow to 5.4% in the fourth quarter, suggesting the price rebound may be losing some momentum.
This moderation in price gains stems partly from the growing adoption of long-term agreements (LTAs).
Currently, Samsung Electronics Co., Ltd. has locked in 60% to 70% of its memory capacity through LTAs, while SK hynix completed LTA negotiations with about ten key customers in the second quarter. These long-term contracts provide stability for the companies and smooth out the severe volatility that has long plagued the memory industry. However, during periods of rapid price increases, LTAs also limit profit upside to some extent, as contract prices tend to lag behind spot prices.
HBM4 Mass Production Accelerates, Battling for Core Influence in AI Infrastructure
In the next-generation high-bandwidth memory (HBM4) segment, which is indispensable for advanced AI applications, the third quarter also marks a turning point.
With increased chip shipments to Nvidia's next-generation AI platform Vera Rubin, Samsung Electronics Co., Ltd. expects its third-quarter HBM4 sales to more than triple compared with the second quarter, accounting for over 60% of its total HBM revenue in the second half of 2026. For SK hynix, the challenge is to expand HBM4 production scale while maintaining its leadership position in the HBM3E market. Third-quarter results will offer preliminary clues about the landscape of this high-stakes race.
This hunger for high-bandwidth memory is reshaping the underlying logic of the entire tech industry.
According to a KB Securities report, with Meta's launch of the agent-based AI application Muse, AI services are entering a new era that requires continuous, sequential operations and higher memory bandwidth. Traditional generative AI processes roughly 100 tokens per second, while agentic AI demand soars to 1,000 tokens per second. This tenfold leap in data processing volume is fundamentally changing data center architecture.
KB Securities analyst Kim noted: "In AI data centers, the GPU is the heart, the CPU is the brain, electricity is the oxygen, and memory is the blood circulation system that continuously supplies and circulates data. Ultimately, the key to AI data center performance and efficiency will shift to memory."
This trend is already becoming apparent across the broader industry. AMD's recent entry into the "trillion-dollar market cap club" alongside Nvidia, Broadcom, and Micron, as well as its second-quarter data center revenue surging 107% year-on-year, both indicate that the market now values CPUs and memory on par with GPUs. To this end, Samsung Electronics Co., Ltd. is already eyeing next-generation "zHBM" technology, planning to stack memory directly on top of GPUs and aiming to provide samples by the end of 2027.
Foundry Business Turns a Corner, "Chip Inflation" Tests Device Operations
Beyond its core memory business, Samsung Electronics Co., Ltd.'s non-memory divisions are also under the market's microscope.
After consecutive losses since 2023, Samsung Electronics Co., Ltd.'s foundry business is widely expected to return to profitability in the third quarter, buoyed by expanded 4nm language processing unit (LPU) capacity and improved yields. If that goal is achieved, it would greatly boost investor confidence and eliminate a major overhang that has long weighed on Samsung's overall valuation.
However, the Device eXperience (DX) division, responsible for smartphones and TVs, is facing a "chip inflation paradox."
In the second quarter, the DX division recorded an operating loss of 8 billion won, as strong sales of high-end devices such as Galaxy Foldables failed to offset rising component costs. The memory price surge that benefits the semiconductor business has become a heavy burden on the device hardware division. The core question for the third quarter is whether sales of high-end products can absorb these cost pressures, or whether the dilemma of "profit on one side, loss on the other" will persist.
Moving Past the "Peak" Debate, Reshaping Long-Term Valuation Logic
As the third-quarter earnings disclosure period approaches, the global semiconductor industry's focus is shifting from the absolute scale of profits to their sustainability.
Investors who have weathered past cyclical swings remain vigilant. If Samsung Electronics Co., Ltd. and SK hynix can demonstrate that long-term agreements have effectively locked in demand, that HBM4 can deliver substantial profits, and that the foundry business is back on track, then the current supercycle will prove more resilient than those of the past.
Conversely, if DRAM and NAND price growth slows more than expected, or if HBM4's profit contribution falls short of expectations, the debate over whether the semiconductor industry has already "peaked" will inevitably reignite.
In the coming weeks, these two earnings reports will not only determine the short-term market cap trajectory of the two giants but also set the tone for global tech infrastructure investment over the next several years.
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