Latent EquitySamsung's record chip quarter backs the memory-price story, not a volume story
Our read: Samsung's record chip quarter backs the memory-price story, not a volume story.
Samsung's chip unit kept 72.4% of Q3 sales as operating profit (our calc), well above 55.6% in its best quarter of 2018.
SK hynix, $SKHY, did the same thing a day earlier: 79.7%, against 56.7% at its 2018 peak. Operating profit is what's left from sales after the costs of running the business.
What drove it, in Samsung's own words: memory prices "increased across all applications, led by strong demand momentum for servers", with capacity limited. Samsung doesn't say how many more chips it shipped or how much prices rose.
Memory sales rose 16% from Q2. You may see +427%: that's memory sales, not profit, compared with a weak quarter a year ago.
Two caveats. The chip unit also includes contract chipmaking and logic chips, and Samsung doesn't report a memory-only margin. The 2018 figure is the chip business on its own, without the display unit Samsung reported in the same division back then, so it lines up with today's chip unit.
Samsung's outlook points the same way. Its results slides say AI demand is "likely to further tighten supply shortages" in 2027 compared with this year.
Samsung also said on its call that its 2027 supply of HBM, the stacked memory used next to AI chips, is already sold out at an agreed price, and that it expects supply to stay tight in 2028.
What would prove us wrong
Set before publication. We report back in public when one trips.
- if SK hynix's Q4 report in late January shows DRAM prices rising no faster than its roughly 25% shipment growth, profit is no longer led by price. Open · next check: SK hynix Q4 report (late January 2027)
Method and sources
Figures marked "our calc" are our own arithmetic on the cited primary sources (company filings, earnings releases, public datasets). Every figure was checked against its source before publication.
General research, the same for every reader. Not investment advice.