AI-driven demand and DRAM price surge fuel expectations of record-breaking combined operating profits
Samsung Electronics and SK Hynix announced on the 16th that they will proceed with large-scale semiconductor facility investments. Samsung Electronics will begin construction of the fifth plant (P5) at its Pyeongtaek Campus. The plan is to complete it by 2028 to expand production of next-generation memory semiconductors such as high-bandwidth memory (HBM). It is expected that at least 60 trillion Korean won will be invested. SK Hynix will invest at least 128 trillion Korean won to build a total of four fabs (factories) in the Yongin Semiconductor Cluster. Similarly, this is to increase production of high-value-added memory such as HBM.
Behind these large-scale investments lies the surging memory demand driven by the spread of artificial intelligence (AI). As big tech companies continue to face prolonged memory shortages due to the expansion of AI data centers and other infrastructure, expectations are pouring in that next year’s operating profits of Samsung Electronics and SK Hynix will far exceed double this year’s figures. The tech industry forecasts that this “semiconductor supercycle” is not a periodic boom that occurs once every seven to eight years but an unprecedented boom stemming from structural causes.
◇Samsung+SK Hynix Expected to See Next Year’s Operating Profit Exceed 200 Trillion Won
According to the tech industry and securities firms, Samsung Electronics’ consolidated operating profit for this year is expected to increase by 15.14% from a year ago to 37.6809 trillion Korean won. SK Hynix is projected to see its operating profit this year increase by 79.2% from a year ago to 4.20528 trillion Korean won. The two companies’ operating profits are expected to rise further on the semiconductor supercycle. Securities firms expect Samsung Electronics’ annual operating profit next year to reach 76.2045 trillion Korean won, double this year’s figure, and SK Hynix’s annual operating profit to increase by 67.1% from this year to 70.2742 trillion Korean won.
A month ago, domestic securities firms had projected Samsung Electronics’ operating profit next year at 50.3124 trillion Korean won and SK Hynix’s at 50.2460 trillion Korean won. As the prices of general-purpose DRAM semiconductors surged faster than expected, securities firms revised their market outlooks upward within a month.
Foreign securities firms have an even brighter outlook. Morgan Stanley, in a report titled “Memory – Maximum Pricing Power” released on the 10th (local time), projected Samsung Electronics’ operating profit next year at 116.4480 trillion Korean won. Of this, the semiconductor division (DS) is expected to post an operating profit of 94.6250 trillion Korean won. The operating profit forecast for 2027 is higher, at 135.2200 trillion Korean won, with the semiconductor business’ operating profit projected at 109.8960 trillion Korean won. This suggests that Samsung Electronics could surpass an annual operating profit of 100 trillion Korean won, a milestone it has never achieved before.
Morgan Stanley stated, “Considering the scale of AI infrastructure investment and trends among hyperscale customers, DRAM peak prices are expected to surpass the record highs of the cloud-driven supercycle in early 2018,” adding, “The key question is whether memory sector profits will continue to grow until 2027, which depends on the situation in mid-2026.”
◇”General DRAM Profit May Exceed HBM Profit”
The outlook for SK Hynix has also soared. On the 3rd, Nomura Securities in Japan projected that SK Hynix’s operating profit next year will surpass that of TSMC, the world’s largest semiconductor foundry (contract manufacturing) company. It presented an operating profit forecast of 99 trillion Korean won for next year and 128 trillion Korean won for 2027. A semiconductor industry source said, “According to Morgan Stanley and Nomura Securities, which have presented relatively high operating profit forecasts, the combined annual operating profits of Samsung Electronics and SK Hynix are expected to exceed 200 trillion Korean won next year.”
The reason for the expectation that the profits of the two semiconductor companies will surge significantly next year lies in the unusual upward trend in DRAM prices. The analysis suggests that as the supply of high-unit-price HBM increases and general-purpose DRAM prices also rise, the companies could see a dual boost in profits.
DRAM prices began to rise in April due to three reasons: ① Semiconductor companies reduced DRAM production as they increased HBM production for AI accelerators, ② General-purpose DRAM demand surged as servers entered their replacement cycle, and ③ Companies responded cautiously to new general-purpose DRAM capacity expansions to manage risks.
Memory prices have been soaring. The price of general-purpose DRAM for PCs (DDR4 8Gb), which was $1.35 on March 31, rose 4.2 times to $7 on October 31. Recently, there are many observations that prices will rise further. TrendForce, a market analysis firm, forecasted that DRAM prices in the fourth quarter of this year will increase by 30-35% from existing levels, and by another 20-25% in the first quarter of next year. An industry source said, “This supercycle is something that may come once in a lifetime.”
Because of this, there are talks in the semiconductor industry that profits from selling general-purpose DRAM could exceed those from HBM. Kim Dong-won, an analyst at KB Securities, said, “DDR5 margins are expected to surpass HBM in 2026, leading to a reversal in profitability, and Samsung Electronics, which operates 70% of its total DRAM production capacity for general-purpose DRAM, will directly benefit.” This structure is expected to continue for the time being, sustaining the semiconductor boom.
