Samsung Warns Chip Shortage Will Worsen as AI Boom Drives Record Profit

SEOUL (GeokHub) — Samsung Electronics said a deepening global chip shortage driven by surging artificial intelligence demand is likely to persist, even as the company reported record quarterly profits powered by soaring memory chip prices.

The South Korean tech giant said operating profit more than tripled in the final quarter of last year, highlighting the strong pricing power of the world’s largest memory chipmaker as AI data center investment accelerates worldwide.

However, executives cautioned that rising memory costs are creating pressure on Samsung’s other businesses, including smartphones and displays, potentially weighing on margins in 2026.

AI Demand Fuels Record Earnings

Samsung reported operating profit of 20 trillion won ($14 billion) for the October–December quarter, up from 6.5 trillion won a year earlier. Revenue rose 24% to 93.8 trillion won, driven largely by its semiconductor division.

The chip business alone delivered 16.4 trillion won in operating profit — more than 80% of the company’s total earnings — as tight supply and relentless AI demand lifted memory prices sharply.

Samsung executives said shortages across most memory products are expected to continue, with limited capacity expansion planned over the next two years.

Smartphones and Displays Face Cost Pressure

While chips are booming, Samsung’s mobile division reported a 10% decline in profit, squeezed by higher component costs. Executives warned that smartphones and display panels will face a challenging year as memory prices rise faster than consumer demand.

Samsung said it is working closely with partners to stabilize supply while cutting costs internally to protect profitability. Co-CEO TM Roh described the chip shortage as “unprecedented” and said price increases were not being ruled out.

The display unit also expects weaker smartphone demand in the near term, despite strong sales linked to premium devices, particularly Apple’s latest iPhone lineup.

HBM Chips and Nvidia Orders

Samsung confirmed it has begun producing its next-generation high-bandwidth memory (HBM4) chips and plans to ship initial volumes in February to a major customer, widely understood to be Nvidia.

The company said all of its HBM production capacity for this year is already booked, with total HBM revenue expected to more than triple in 2026.

Samsung is racing to close the gap with rival SK Hynix, which currently dominates the market for advanced AI memory used in data centers. Both companies are redirecting manufacturing capacity toward AI-focused chips, tightening supply of conventional memory.

Industry Outlook

Analysts say the AI infrastructure buildout is reshaping the semiconductor industry, allowing chipmakers to raise prices aggressively as demand outpaces supply.

With limited new capacity coming online and AI investment accelerating, industry executives expect elevated prices and shortages to remain a defining feature of the market well into next year.