Samsung Is Making Another Record-Breaking Profit Quarter, but Not From Selling Phones
Samsung Electronics has reported its highest-ever quarterly earnings, driven by growing demand for artificial intelligence (AI) memory chips and server storage.
The South Korean technology giant recorded KRW 195.3 trillion (approximately $146 billion) in revenue and KRW 107.4 trillion (around $80.5 billion) in operating profit for the third quarter of 2026.
Revenue increased 14% compared with the previous quarter, while operating profit rose approximately 20%.
According to Samsung, it is the first technology company to report more than KRW 100 trillion in operating profit in a single quarter.
AI Memory Chips Drive Record Profits
Samsung’s Device Solutions (DS) division, which produces semiconductors and memory chips, accounted for most of the company’s earnings.
The division generated KRW 147.1 trillion in revenue and KRW 106.5 trillion in operating profit, setting new quarterly records.
Samsung attributed the strong performance to increased demand for high-bandwidth memory (HBM4), which is used in AI systems, and solid-state drives (SSDs) designed for servers.
The company significantly increased HBM4 sales as technology companies continued expanding their AI infrastructure.
Strong demand also pushed memory prices higher across different product categories.
Samsung expects the trend to continue into the fourth quarter as new CPU and GPU platforms increase demand for advanced memory products.
Looking ahead to 2027, the company expects AI-related memory demand to grow faster than industry supply, potentially maintaining pressure on memory availability.
Samsung’s Smartphone Business Records Losses
While its semiconductor business achieved record earnings, Samsung’s smartphone division continued to struggle with profitability.
The Mobile eXperience (MX) and Networks businesses reported combined revenue of KRW 37.7 trillion and an operating loss of KRW 0.6 trillion.
This was an improvement from the previous quarter, when the divisions generated KRW 33.2 trillion in revenue and recorded a KRW 0.7 trillion operating loss.
Samsung said smartphone sales improved following the introduction of new flagship devices, including its foldable models.
However, higher component costs continued to affect profitability.
For the final quarter of 2026, Samsung plans to increase sales of the Galaxy S26 series, Galaxy Z Fold8, and Galaxy Z Fold8 Ultra during the holiday shopping season.
The company also plans to introduce additional products within its device ecosystem.
In 2027, Samsung intends to focus on premium smartphones and introduce hardware and design improvements to strengthen its flagship lineup.
Samsung Expands Investment in Advanced Chips
Samsung also reported improvements in its chip manufacturing business.
Sales of flagship processors and 200MP camera sensors increased during the quarter.
The company expects further growth from advanced semiconductor manufacturing technologies, particularly its 2nm and 4nm production processes.
Samsung anticipates double-digit revenue growth in its foundry business during the fourth quarter as it increases production of 4nm neural processing units and other advanced chips.
Its new semiconductor manufacturing facility in Taylor, Texas, is expected to begin operations in 2027.
Meanwhile, Samsung increased its quarterly capital expenditure to KRW 29 trillion, up KRW 12.2 trillion from the previous quarter.
Of that amount, KRW 27.2 trillion went toward its semiconductor business, while KRW 1.1 trillion was allocated to Samsung Display.
Display Business Reports Higher Earnings
Samsung Display Corporation reported KRW 8 trillion in quarterly revenue and KRW 1.1 trillion in operating profit.
The division benefited from strong demand for premium smartphone displays and increased sales of gaming monitors.
Samsung expects seasonal demand and new product launches to support display sales during the final quarter, although external factors could limit earnings growth.
For 2027, the company plans to increase its focus on premium displays, including foldable smartphone panels.
Samsung Announces Major Shareholder Payout
Samsung also announced a third-quarter cash dividend of KRW 4,601 per common and preferred share.
The total dividend payout will amount to KRW 30 trillion.
For the full year, Samsung plans to return between KRW 90 trillion and KRW 110 trillion to shareholders through a combination of cash dividends and share repurchases.
The company expects to finalize its remaining shareholder return plans in January 2027.
Samsung’s latest results highlight the growing importance of AI memory chips to its business, even as higher costs continue to put pressure on its smartphone operations.
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