Samsung Electronics announced a stunning third-quarter performance, reporting an operating profit of 12.1 trillion won (approximately $8.8 billion USD), a figure that significantly outpaced market forecasts. The tech giant’s preliminary earnings, released on Tuesday, represent a 31.81% increase from the same period last year and mark the company’s triumphant return to the “10 trillion won club” for the first time in five quarters. This result is the highest quarterly profit Samsung has seen in over three years, largely credited to a powerful recovery in its semiconductor division fueled by the artificial intelligence boom.
In another historic milestone, the company’s revenue surged to a record-breaking 86 trillion won (approximately $62.5 billion USD), an 8.72% year-over-year increase and the first time quarterly sales have ever surpassed the 80 trillion won mark. This performance handily beat securities firms’ projections, which had anticipated an operating profit closer to the 10.3 trillion won range.
Semiconductor Division Leads the Charge
While Samsung has not yet released a detailed breakdown by division, market analysts estimate that the Device Solutions (DS) division, which oversees the semiconductor business, generated over 6 trillion won in operating profit. This marks a dramatic turnaround from the 3.86 trillion won it posted in Q3 of last year and a mere 400 billion won in the preceding quarter.
The robust performance is attributed to soaring demand for high-bandwidth memory (HBM), DRAM, and server solid-state drives (SSDs) as the AI industry expands. Samsung is a key supplier of the latest HBM3E memory to major players like AMD. This strategic focus on high-performance memory has tightened the supply of general-purpose DRAM, leading to a significant price increase in the third quarter. According to global market research firm Counterpoint Research, this surge has allowed Samsung to reclaim its title as the number one player in the global memory market, surpassing rival SK Hynix just one quarter after losing the top spot.
Further bolstering the company’s bottom line, the Mobile eXperience (MX) division is believed to have contributed around 3 trillion won in operating profit, driven by strong sales of its latest flagship foldable, the Galaxy Z Fold 7.
Stock Dips Despite Stellar Report in “Sell-the-News” Event
Despite the overwhelmingly positive earnings announcement, which briefly pushed the company’s stock to a 52-week high, Samsung Electronics’ shares closed down 1.82% at 91,600 won. Analysts attribute this to a classic “sell-the-news” event, where investors who had bought in anticipation of the good news engaged in profit-taking. Institutional investors led the sell-off, while foreign investors continued their buying streak.
However, financial experts remain bullish, asserting that the dip is a temporary market correction rather than a sign of a downward trend. Han Ji-young, a researcher at Kiwoom Securities, noted that the market was likely experiencing “short-term overheating and fatigue” after a period of sustained gains. Major investment banks, including Morgan Stanley and Citigroup, have raised their target prices for Samsung, with Citi setting a target of 120,000 won. They point to the ongoing “super cycle” in memory chips, driven by AI server demand, as a strong indicator of future growth, with Morgan Stanley predicting the cycle will peak in 2027.
New Incentive Plan Aims to Align Employee and Shareholder Interests
In a move to foster long-term growth and align employee interests with those of shareholders, Samsung also unveiled a new long-term incentive program. The company announced it will grant Performance Share Units (PSUs) to employees, with the final number of shares awarded in three years tied to the company’s stock performance.
This new system is designed to reward future achievements, moving away from a sole reliance on short-term profit bonuses. Under the plan, the value of employee compensation will grow directly with Samsung’s stock price. The initiative is seen by industry insiders as a key part of Chairman Jay Y. Lee’s “future-oriented management” philosophy, aimed at boosting employee morale and commitment while enhancing shareholder value amid global economic uncertainties. Additionally, the company is revamping its existing bonus structure to allow employees the option to receive up to 50% of their annual performance bonus in company stock, with an additional 15% incentive for holding those shares for at least a year.