The world’s largest semiconductor-maker is reaping the rewards of a international reminiscence chip scarcity pushed by AI demand so rapacious that it is making everybody else depressing.
Samsung mentioned in its newest earnings report that it noticed report earnings, up nearly 500% from the identical interval final 12 months, to $31.72 billion. The determine was boosted by an almost 50-fold enhance in income from its chip enterprise.
The corporate has offered out all of its reminiscence manufacturing capability for the remainder of this 12 months and says that shortages, that are driving up costs of every little thing from laptops to smartphones to exterior storage units to gaming consoles, will worsen in 2027. That, in all chance, will proceed to extend costs for tech units and start affecting the procuring conduct of thousands and thousands of customers.
In an investor name for its earnings report, one of many firm’s reminiscence chip executives, Kim Jaejune, mentioned, “Primarily based solely on the demand at present obtained for 2027, the supply-to-demand hole for 2027 is ready to widen even additional than in 2026.”
Lengthy-term reminiscence loss
Reminiscence costs started growing considerably final 12 months as a growth in information facilities supporting AI firms wolfed up huge provides of reminiscence used to energy the {hardware} that processes all their information. That, in flip, led to international shortages and worth spikes which can be nonetheless being felt and that — in keeping with Samsung — will not ease up anytime quickly.
Samsung is attempting to maintain up with demand from firms, together with Nvidia, even because it competes with those self same firms, that are additionally producing their very own semiconductors. Apple, Microsoft and Alphabet are among the many world’s high reminiscence makers, however they’re additionally prospects of Samsung and might’t produce the quantity of reminiscence required to satisfy their rising wants themselves.
What the corporate’s chip executives are saying a few extended reminiscence scarcity aligns with what analysts, different firms and chip-production capability information already verify, mentioned Quandary Peak Analysis govt vp and former Samsung govt Mahdi Eslamimehr.
“New fab capability stays years away, and current strains are being reallocated to HBM (excessive bandwidth reminiscence) and enterprise DDR5, structurally squeezing commodity provide,” Eslamimehr mentioned.
Samsung’s earnings, he added, “mirror a real AI-driven supercycle slightly than a fleeting spike.”
To make issues worse, he mentioned, Samsung has binding, multi-year contracts with a few of its prospects that assist safe its moneymaking, but in addition depart little or no flexibility for non-AI reminiscence manufacturing.
Maintain that improve…
In the meantime, for folks shopping for tech merchandise, telephones and PCs will proceed to get extra expensive with no reduction in sight. That, in flip, means folks might maintain on to their units longer earlier than changing them, delay new purchases, and go for lower-cost, much less highly effective expertise in the event that they’re price-sensitive.
“Whereas Samsung and its AI prospects thrive, on a regular basis customers pays extra for telephones, laptops, SSDs and gaming {hardware}, with the ache most acute within the funds and midrange segments that drive quantity,” Eslamimehr mentioned.
