Samsung Electronics reported record second-quarter earnings after strong demand for memory chips pushed its semiconductor business to its highest profit on record.
However, the company also posted its first quarterly loss in its mobile business as high memory prices increased the cost of making smartphones.
The South Korean technology company said semiconductor operating profit reached ₩89.2 trillion ($61.7 billion) during the second quarter, more than 250 times higher than the same period last year.
Overall operating profit rose to ₩89.5 trillion, in line with its earlier guidance, while revenue more than doubled to ₩171.5 trillion, up 130% year-on-year.
The results show how demand for memory chips lifts Samsung’s earnings even as other parts of the business face challenges.
Higher chip prices boosted the semiconductor division, but they also raised costs of production for Samsung’s mobile business, which recorded a ₩700 billion operating loss, its first quarterly loss.
Despite reporting record earnings, Samsung’s shares closed 0.7% lower on Thursday after rising as much as 8.4% during trading.
The decline shows investors are worried about the current surge in demand for artificial intelligence infrastructure and whether it can be sustained over the long term.
Samsung said it has already signed multi-year memory chip supply agreements with the world’s five largest data centre operators and is close to securing similar deals with five more major customers.
The company expects those long-term contracts to cover about two-thirds of its memory chip production, giving it greater stability against the industry’s traditional boom-and-bust cycle.
“Almost all customers are requesting multi-year supply contracts,” Jaejune Kim, executive vice president of Samsung’s memory business, told analysts on an earnings call.
He added that the agreements will run for at least five years and typically include upfront payments and minimum pricing to reduce investment risk.
Samsung also expects revenue from its latest high-bandwidth memory (HBM4) chips to more than triple in the third quarter. The company believes this will help narrow the gap with rival SK Hynix in supplying memory used in AI processors.
The company counts Nvidia and Advanced Micro Devices (AMD) among its HBM customers and expects demand for advanced memory chips to remain strong.
Beyond memory chips, Samsung said its contract chip manufacturing business is also improving. It expects the foundry unit to return to profit soon as factory utilisation and chip prices continue to rise.
Samsung confirmed that its semiconductor plant in Taylor, Texas, remains on schedule to begin operations this year. It also plans to start construction of a second facility that could begin mass production in 2030.
The strong quarter also strengthened Samsung’s balance sheet. Net cash increased to ₩167 trillion by the end of June, prompting expectations that the company could increase shareholder returns.
Chief Financial Officer Park Soon-cheol said Samsung is “in active discussion” over special dividends and other aspects of its shareholder return program for this year.
“We remain fully committed to delivering on the program as promised and will provide for the update very soon,” he said.
However, technology stocks have been unstable in recent months as companies spend heavily on AI infrastructure. Competition from Chinese manufacturers has also added pressure on the sector.
Even so, Samsung’s latest results underline how its semiconductor business has become the group’s biggest earnings driver. Record chip profits more than offset weakness in smartphones, although the company will be hoping demand for premium mobile devices improves as component costs stabilise.
