Samsung Warns Chip Shortage Will Deepen as AI Boom Hits Mobiles, Even After Profit Triples

Samsung Electronics expects an acute global chip shortage to persist, driven by surging demand from artificial intelligence, even as the world’s largest memory chipmaker posted a sharp jump in quarterly profit.

The South Korean tech giant said on Thursday that operating profit more than tripled in the fourth quarter to a record level, highlighting how the AI race is boosting memory chip prices and strengthening Samsung’s core semiconductor business. However, the same price surge is creating headwinds for its smartphone and display divisions by pushing up component costs.Samsung warned that shortages of memory chips are likely to worsen this year, with limited expansion in supply expected in 2026 and 2027.

“A significant shortage of memory products across the board is expected to continue for the time being,” Kim Jaejune, an executive in Samsung’s memory business, told analysts on the company’s earnings call.
Strong chip profits, pressure on mobiles
Samsung reported operating profit of 20 trillion won ($13.98 billion) for the October–December period, up from 6.49 trillion won a year earlier and in line with its own estimate. Revenue climbed 24% year-on-year to 93.8 trillion won.Its chip division, the company’s main profit engine, saw operating profit surge 470% to a record 16.4 trillion won, accounting for more than 80% of total operating profit.
By contrast, profit in Samsung’s mobile business fell 10% to 1.9 trillion won, squeezed by rising memory chip costs. Higher component prices also weighed on its display unit.
“Memory price increases are expected to accelerate this quarter and are likely to deliver upside earnings, while the cost burden will intensify on the mobile business,” said Sohn In-joon, an analyst at Heungkuk Securities. He expects Samsung’s overall profit to jump about five-fold in the current quarter from a year earlier.
Samsung shares slipped 1.2% after the results, following a strong rally earlier this year.Mobiles and displays face a challenging year
Samsung’s mobile and display divisions warned of a “challenging year” as memory price hikes continue to pressure margins.
Cho Seung, a Samsung mobile executive, said the company would work closely with key partners to secure stable supply and improve efficiency to limit profit erosion. Samsung co-CEO TM Roh described the current chip shortage as “unprecedented” in an interview with Reuters and did not rule out raising prices.

“How the division defends margins as the year progresses will be a key issue,” said Ko Yeongmin, an analyst at Daol Investment & Securities.
The display unit also expects smartphone demand to weaken in the current quarter as higher chip prices weigh on customers, while buyers are likely to push for lower panel prices.
Despite this, Samsung’s display business more than doubled its profit to 2 trillion won in the fourth quarter, helped by strong sales tied to Apple’s iPhone 17 series.
HBM chips and the AI race
Samsung said it has begun producing its next-generation high-bandwidth memory chips, known as HBM4, and plans to ship them in February at the request of a major customer — widely seen as Nvidia.
The company said customers are in the process of completing qualification tests and that overall HBM revenue is expected to more than triple this year. Samsung has already secured orders for all of its HBM capacity for 2026.

The company is working to close the gap with rival SK Hynix, a key supplier of advanced memory chips used in Nvidia’s AI accelerators. SK Hynix said it aims to maintain its leading position in HBM4 and has begun large-scale production of next-generation chips to meet customer demand.

The rapid buildout of AI infrastructure has pushed chipmakers to shift manufacturing capacity toward high-bandwidth memory for AI servers, tightening supplies of conventional memory chips and giving suppliers strong pricing power.
“They’re in the enviable position of being able to dictate price and terms more than ever,” said Tobey Gonnerman, president of semiconductor distributor Fusion Worldwide.