Samsung Electronics is expected to break another quarterly record for the highest-ever performance this third quarter, driven by expanded sales of HBM4 (sixth-generation high-bandwidth memory). The non-memory business, including foundry services, is also anticipated to significantly reduce its losses. However, some analysts warn that actual results may fall short of market expectations due to a slowdown in DRAM price increases and the strengthening of the won.
According to financial information provider FNGuide on the 27th, the consensus estimate for Samsung Electronics' third-quarter operating profit (average forecast by securities firms) stands at 111 trillion 817.5 billion won. If realized, this would surpass the previous quarter's record of 89 trillion 492.4 billion won and set a new all-time high for four consecutive quarters since the fourth quarter of last year. Samsung Electronics is scheduled to announce its preliminary third-quarter earnings early next month.
This quarter's performance is expected to be driven by expanded HBM4 sales, as revenues from HBM4 for Nvidia's next-generation AI platform 'Vera Rubin' begin to fully reflect. Kim Jae-jun, Executive Vice President of Samsung Electronics' Memory Business Division, previously announced during the second-quarter earnings conference call that "HBM4 sales in the third quarter will expand by more than three times compared to the previous quarter." Negotiations for HBM supply next year have already been finalized.
The supply-demand situation for DRAM continues to tighten as demand consistently exceeds supply. This is because as the production share of HBM4 expands, the capacity available for general-purpose DRAM production shrinks. According to KB Securities, Samsung Electronics' share of total DRAM production capacity allocated to HBM4 is projected to rise from 27% last year to 33% this year and 40% in 2027, while the share for general-purpose DRAM is expected to contract from 73% to 65% and then to 57% over the same period.
Notably, as of this month, the lead time for Samsung Electronics' high-capacity general-purpose server DRAM, DDR5 (Double Data Rate 5), has reportedly increased by up to 52 weeks. This means it takes a full year from when a customer places an order for semiconductors until they receive the actual product. Kim Dong-won, Head of Research at KB Securities, stated, "Compared to the normal market lead time of six weeks, this is more than eight times longer," and analyzed that "the shortage of general-purpose DRAM supply will not be a short-term phenomenon but will become structurally prolonged."
Expanded HBM4 sales are also expected to improve foundry utilization rates. Samsung Electronics' HBM4 utilizes base dies manufactured using its own 4-nanometer (nm) process (1 nm = one-billionth of a meter). It is reported that more than half of the current 4nm production capacity has been allocated to producing HBM4 base dies. The next-generation HBM4E (seventh generation) is also planned to apply 4nm base dies, so related demand is expected to continue.
However, a slowdown in the rate of increase for general-purpose DRAM prices remains a variable. According to market research firm TrendForce, contract prices for general-purpose DRAM in the third quarter are projected to rise by 13% to 18% compared to the previous quarter. While a double-digit increase is expected, the pace of growth has slowed compared to the previous quarter, when prices rose by approximately 53% to 58%.
A strong won could also limit the extent of performance gains. In its annual business report last year, Samsung Electronics estimated that if the won/dollar exchange rate fell by 5%, pre-tax profit (before corporate tax effects) would decrease by approximately 435.1 billion won.
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