Samsung Electronics Earns 89 Trillion Won from Semiconductors Alone in Q2; First Deficit in Finished Products

Samsung Electronics achieved record profits in its semiconductor division during the second quarter, raking in 89.2 trillion won. This figure represents a staggering 255-fold increase compared to the same period last year and a 1.7-fold rise from the previous quarter. The semiconductor division's revenue reached 127.5 trillion won, up 357.4% year-on-year. Considering Samsung's total operating profit for the quarter was 89.5 trillion won, the semiconductor business accounted for nearly 99.7% of the company's earnings.

The immense profitability in semiconductors is largely attributed to soaring memory prices. DRAM prices increased by over 40% and NAND flash prices by over 60% in the second quarter due to supply shortages. As the largest memory producer, Samsung Electronics was the primary beneficiary of this market condition. Its semiconductor operating profit also significantly surpassed that of SK Hynix, which reported 60.5 trillion won for the same period.

In stark contrast, Samsung's Device eXperience (DX) division, which handles mobile phones, TVs, and home appliances, posted an operating loss of 800 billion won. This marks the first quarterly deficit for the DX division since its establishment in 2021. While the division's first-half revenue exceeded 100 trillion won for the first time, increased costs, particularly the impact of rising memory prices on the mobile business, led to the loss.

Samsung Electronics attempted to quell market concerns about a potential "semiconductor peak-out" by projecting an optimistic outlook. The company stated that the gap between memory demand and supply is expected to widen further next year and persist until 2028. They also highlighted long-term supply agreements with five major tech companies and expressed confidence in turning the loss-making foundry business profitable soon.

Despite these assurances, Samsung Electronics' stock price closed down 0.72% on the day, indicating that investor concerns were not entirely alleviated. SK Hynix shares also fell significantly, by 5.64%.

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The gap between memory demand and supply will become even larger next year than this year, and the supply shortage will intensify next year and continue in 2028.