Samsung's chip division delivers record Q4 profit as AI demand soars

Memory chipmaker posts 470% surge in semiconductor earnings amid tight supply and aggressive pricing

Samsung Electronics recorded a record-breaking fourth quarter in 2025, with operating profit more than tripling to 20 trillion won (US$13.98 billion) as the global AI infrastructure boom drove unprecedented demand for memory chips.

The South Korean technology giant's quarterly revenue rose about 24% from a year earlier to 93.8 trillion won, marking the company's strongest performance since its 2018 peak during the last memory supercycle.

The stellar results were driven almost entirely by Samsung's semiconductor business, which helped drive earnings, setting all-time highs for quarterly revenue and operating profit. The chip division's operating profit surged 470% to a record 16.4 trillion won in the fourth quarter from a year earlier, according to Reuters.

AI boom reshapes memory market

Makers of AI chipsets, such as Nvidia, have been clamoring for limited supplies of HBM, creating a supply shortage that has pushed memory chip prices up by an estimated 40-50% in the quarter, according to Counterpoint Research data. Analysts expect similar price increases in the first quarter of 2026.

"The ongoing AI boom is expected to continue driving favorable market conditions across the industry" in the first quarter of 2026, Samsung said in its earnings statement. The company is now on track to begin delivering its next-generation high-bandwidth memory (HBM) chips, HBM4, in the current quarter.

Analysts expect these chips to be initially shipped to Nvidia, as Samsung works to close the gap with cross-town rival SK Hynix in the lucrative HBM market. Samsung has been playing catch-up after facing supply delays that hit its earnings last year. SK Hynix, which currently dominates as a primary supplier for Nvidia's AI accelerators, reported fourth-quarter profit that more than doubled to a record on Thursday.

Mobile division feels margin pressure

While the chip business thrived, Samsung's mobile division faced headwinds from the same market dynamics. Operating profit in the mobile business declined 10% to 1.9 trillion won, squeezed by surging chip component costs.

Samsung co-CEO TM Roh described the chip shortage as "unprecedented" in an interview with Reuters, adding that the company has not ruled out raising smartphone prices to offset rising memory costs.

"How the division defends margins as the year progresses will be a key issue," said Ko Yeongmin, an analyst at Daol Investment & Securities. The display business, which more than doubled its profit to 2 trillion won on robust iPhone 17 sales, also anticipates customers will push for price cuts in the current quarter as smartphone demand weakens due to soaring memory prices.

Suppliers Dictate Terms

The tight supply situation has given memory chipmakers unprecedented pricing power. "The memory market has entered a 'Hyper-Bull' phase, with current conditions eclipsing the historic 2018 peak. Supplier leverage is at an all-time high, driven by an insatiable demand for AI and server capacity," Counterpoint Research said.

Tobey Gonnerman, president of semiconductor distributor Fusion Worldwide, noted that memory chipmakers are taking a "pay-it-or-leave-it" approach because robust demand far outpaces their ability to supply. "They're in the enviable position of being able to dictate price, terms, etc more than ever," he said.

Samsung and SK Hynix have reportedly been seeking to raise server memory prices by as much as 70% in the first quarter, according to industry sources.

Strong 2026 outlook despite risks

Sohn In-joon, an analyst at Heungkuk Securities, expects Samsung's profit to surge five-fold to around 35 trillion won in the current quarter from a year earlier. Several brokerages now forecast the company's full-year 2026 operating profit could exceed 100 trillion won for the first time.

However, Samsung cautioned that global tariffs and other geopolitical risks remain concerns. The company also warned that rising memory chip prices are creating cost pressures across its smartphone and display businesses.

Samsung shares, which have surged nearly 40% this year, rose 1.2% in morning trade following the results announcement.