The South Korean group reported operating profit of 20 trillion won for the October–December period, more than triple the level recorded a year earlier. Almost all the increase came from semiconductors. 

Profit at the chip division jumped to a record 16.4 trillion won, accounting for more than four-fifths of total earnings, while quarterly revenue climbed 24% to an all-time high of 93.8 trillion won.

What we are seeing is a market stretched by the rush to build large-scale computing infrastructure. Demand for memory used in data centres has overtaken supply, and Samsung is benefiting from that imbalance. 

Management said the pressure is unlikely to ease soon, warning that shortages are expected to persist as expansion plans remain limited through 2026 and 2027.

“A significant shortage of memory products across the board is expected to continue for the time being,” Kim Jaejune told analysts during the company’s earnings call.

The flip side of that success is showing up elsewhere in the group. Higher memory prices are feeding directly into costs for Samsung’s mobile and display units. Mobile operating profit fell 10% to 1.9 trillion won in the quarter, even as smartphone shipments remained stable. 

The company said the year ahead would be difficult for those businesses as they struggle to protect margins.

“Memory price increases are expected to accelerate this quarter and are likely to give surprise earnings, while the memory cost burden will intensify on its mobile business,” said Sohn In-joon of Heungkuk Securities.

Samsung’s display arm revealed a profit which more than doubled to 2 trillion won, supported by strong sales linked to Apple’s latest iPhone line-up, but executives cautioned that customers are already pushing back against higher component costs.

At the centre of the boom is high-bandwidth memory, a specialised chip used in advanced servers. Samsung confirmed it has begun producing its next-generation HBM4 chips and plans to start shipping them in February at the request of a major customer. 

The company said all of its HBM capacity for this year has already been secured, with revenue from the segment expected to more than triple.

Rival SK Hynix is still the top supplier in the HBM market, particularly to Nvidia, and said it is moving ahead with large-scale production of its own next-generation chips after posting record quarterly profit.

Across the industry, manufacturers are moving capacity away from conventional memory used in consumer devices towards more lucrative products for servers, tightening supply further and strengthening pricing power.

“They’re in the enviable position of being able to dictate price, terms, etc more than ever,” said Tobey Gonnerman of Fusion Worldwide.

Samsung shares slipped 1.2% after the profit results, as investors are concerned about increasing expenses outside the chip unit. 

The decline is a 2.6-percentage-point revision from earlier forecasts, with Chinese brands like Honor, Oppo, and vivo facing the biggest setbacks.

“What we are seeing now is the low end of the market (below $200) being impacted most severely, with bill-of-materials costs increasing by 20%-30% since the beginning of the year,” said MS Hwang, research director at Counterpoint. 

Mid- and high-end models are not left out in the global smartphone shipments statistics for 2026, seeing cost jumps between 10% and 15%.

The crunch is being driven by a global shortage of legacy memory chips, as manufacturers change production to high-end semiconductors designed for artificial intelligence servers. 

Nvidia’s move to adopt smartphone-style memory chips in AI servers is expected to double server-memory prices by late 2026, creating sudden demand the industry cannot easily meet.

Yang Wang, senior analyst at Counterpoint, added: “Apple and Samsung are best positioned to weather the next few quarters. But it will be tough for others that don’t have as much wiggle room to manage market share versus profit margins. We will see this play out especially with the Chinese OEMs as the year progresses.”

OEMs are already responding with portfolio adjustments. Some low-end models are being stripped of features like periscope camera modules, high-end displays, and audio components. 

Others are pushing consumers toward higher-spec ‘Pro’ variants or streamlining product lines to mitigate cost pressures. Shenghao Bai, another senior analyst, noted: “Other tactics include reusing old components, streamlining the portfolio, and pushing consumers to higher-specification ‘Pro’ variants and adopting new designs to stimulate upgrades.”

As a result of cost pass-through and strategic portfolio changes, average selling prices are projected to rise by 6.9% in 2026, an increase from the 3.9% forecasted in September. 

The low-end segment is expected to be the hardest hit, with price hikes potentially pricing out some consumers entirely.