The AI wave is driving a global semiconductor "supercycle," with Samsung and SK Hynix's combined third-quarter operating profit poised to near the historical record of 190 trillion won. The race for HBM4 is heating up, as generative AI is boosting memory bandwidth demand by a factor of ten, turning memory into the true "lifeblood" of AI data centers. Two upcoming earnings reports will determine whether this boom is merely a fleeting surge or a structural transformation that reshapes the tech infrastructure.
Driven by robust AI demand and the advancement of next-generation storage technologies, South Korea's two major chipmakers…$Samsung Electronics (005930.KR)$and$SK Hynix (000660.KR)$They are at the heart of the global semiconductor "supercycle." As the two companies' third-quarter earnings reports approach, their financial performance will serve as a crucial litmus test for the global market, gauging the sustainability of profits in the "AI‑driven trading" sector.
The market currently holds extremely high expectations for the performance of the two industry giants. According to data from FnGuide cited by the Seoul Economic Daily, Samsung Electronics is expected to post Q3 revenue of KRW 199.1 trillion and operating profit of KRW 105.6 trillion, while SK Hynix is forecast to report revenue of KRW 94.1 trillion and operating profit of KRW 74.1 trillion. Combined, the two companies' operating profit could approach a record KRW 189.9 trillion, vividly reflecting the robust market momentum amid the ongoing chip supply shortage.
However, behind the impressive financial figures, market consensus expectations have recently been slightly revised. Over the past three months, analysts have lowered their revenue and profit forecasts for Samsung Electronics by 2.6% and 4.4%, respectively, while SK Hynix's estimates have been cut by 5.3% and 5%, respectively. This latest shift is primarily attributable to the weakening of the U.S. dollar—driven by a stronger Korean won—which has reduced sales denominated in dollars, rather than to a downturn in the memory‑chip market itself. Nevertheless, this development is enough to prompt the market to reassess the direct impact of exchange‑rate volatility on the short-term earnings of tech giants.
Beneath the seemingly impressive headline figures, the upcoming third-quarter earnings reports will convey deeper signals to the market. Investors are closely scrutinizing the sustainability of memory‑chip price hikes, the profit‑locking effect of long-term supply agreements (LTAs), and whether next‑generation high‑bandwidth memory can translate into tangible bottom-line gains—key factors in determining whether the current boom is a fleeting surge or a structurally resilient shift with lasting implications.
Storage price increases are easing, with long-term contracts helping to dampen volatility.
The sharp rise in the average selling prices (ASPs) of DRAM and NAND flash memory in the second quarter was the primary driver behind the strong financial performance of both companies.
Entering the third quarter, the market expects prices to continue rising, though at a slower pace. According to Mirae Asset Securities,$Samsung Electronics (005930.KR)$DRAM ASPs are expected to rise 16.5% in the third quarter, but the increase will narrow to 5.4% in the fourth quarter, suggesting that the price rebound may be losing some momentum.
This moderation in price increases is partly attributable to the growing prevalence of long-term supply agreements (LTAs).
Currently,$Samsung Electronics (005930.KR)$Through the LTA, it has secured 60% to 70% of its storage capacity, while…$SK Hynix (000660.KR)$In the second quarter, we concluded LTA negotiations with approximately ten key customers. These long-term contracts provide the company with stability and help mitigate the pronounced volatility that has long characterized the storage industry. However, during periods of rapid price increases, because contract prices typically lag behind spot prices, LTAs also to some extent constrain the upside in profitability.
HBM4 mass production is accelerating, as companies vie for a leading voice in AI infrastructure.
In the realm of next-generation high-bandwidth memory (HBM4)—an indispensable component for advanced AI applications—the third quarter also marked a turning point.
As shipments of chips for Nvidia's next‑generation AI platform, Vera Rubin, ramp up, Samsung Electronics expects its HBM4 sales in the third quarter to more than double compared with the second quarter and to account for over 60% of its total HBM revenue in the second half of 2026. For SK Hynix, the challenge lies in maintaining its market leadership in HBM3E while scaling up production of HBM4. Third‑quarter results will offer early insights into the dynamics of this high‑stakes race.
This insatiable demand for high-bandwidth memory is reshaping the very foundations of the technology industry.
According to a report by KB Securities cited by Global Economy, with Meta's launch of the agent‑based AI application Muse, AI services are entering a new era that demands continuous, sequential operations and significantly higher memory bandwidth. While traditional generative AI processes roughly 100 tokens per second, the demand for agent‑based AI has surged to 1,000 tokens per second. This tenfold increase in data throughput is fundamentally reshaping data center architectures.
KB Securities analyst Kim noted: "In AI data centers, GPUs are the heart, CPUs are the brain, electricity is the oxygen, and memory serves as the circulatory system that continuously supplies and recycles data. Ultimately, the key to AI data center performance and efficiency will shift to memory."
This trend is already evident across broader industries: AMD recently joined the "trillion-dollar market-cap club" alongside Nvidia, Broadcom, and Micron, while its second-quarter data-center revenue surged 107% year over year—both developments signaling that the market now places CPU and memory technologies on par with GPUs. In response, Samsung Electronics is already eyeing next‑generation "zHBM" technology, planning to stack memory directly atop GPUs and aiming to deliver samples by the end of 2027.
Foundry services are poised for a turnaround, while "chip inflation" is putting end‑market businesses to the test.
In addition to its core storage business,$Samsung Electronics (005930.KR)$Its non-storage division is likewise under the market's scrutiny.
After posting consecutive losses since 2023, Samsung's foundry business is widely expected to turn profitable in the third quarter, boosted by expanded capacity and improved yield for its 4nm logic processing units (LPUs). If this target is achieved, it would significantly bolster investor confidence and eliminate a long-standing drag on Samsung's overall valuation.
However, Samsung's Device Experience (DX) division, which oversees smartphones and TVs, is grappling with the "chip inflation paradox."
In the second quarter, despite strong sales of high-end devices such as the Galaxy Foldables, the DX division posted an operating loss of KRW 8 billion, as rising component costs outweighed these gains. The sharp surge in memory prices—beneficial for the semiconductor business—has become a significant drag on the terminal‑hardware segment. The key question for the third quarter is whether sales of premium products can offset these cost pressures, or whether this "profit in one area while losing in another" dilemma will persist.
Bridging the "peak" debate and reshaping long-term valuation logic
As the third-quarter earnings season approaches, the global semiconductor industry's focus is shifting from the absolute magnitude of profits to their sustainability.
Investors who have experienced past cyclical fluctuations remain cautious; if…$Samsung Electronics (005930.KR)$If SK Hynix can demonstrate that long-term contracts have effectively locked in demand, that HBM4 is generating robust profits, and that its foundry business has returned to a healthy trajectory, then the current supercycle will prove more resilient than previous ones.
Conversely, if DRAM and NAND price growth slows more sharply than expected, or if HBM4's profit contribution falls short of projections, the debate over whether the semiconductor industry has already peaked is sure to reignite.
Over the coming weeks, these two earnings reports will not only shape the short-term market capitalization trajectories of the two tech giants but also set the tone for global technology infrastructure investment in the years ahead.
Edited by melody