With Q3 financial reports approaching, Samsung Electronics and SK Hynix face "extremely high expectations," testing "global AI trading"

Driven by robust AI demand and advances in next-generation memory technology, Korea’s two chip giants, Samsung Electronics and SK Hynix, now stand at the center of a global semiconductor “supercycle.” As both companies approach their third-quarter earnings announcements, their results will serve as a critical litmus test for the global market to gauge the sustainability of the “AI trade’s” profitability.

Market expectations for the two giants are extremely high at present. According to reports from The Seoul Economic Daily citing FnGuide data, Samsung Electronics is expected to achieve sales of 199.1 trillion won and operating profit of 105.6 trillion won in the third quarter, while SK Hynix’s revenue and operating profit are forecast to reach 94.1 trillion won and 74.1 trillion won, respectively. The combined operating profit of the two companies could approach a record 189.9 trillion won, directly reflecting the strong market momentum driven by the current chip supply shortage.

However, behind the dazzling headline numbers, recent consensus expectations have seen some adjustment. Over the past three months, analysts have lowered Samsung Electronics’ sales and profit forecasts by 2.6% and 4.4%, respectively, while SK Hynix’s estimates were cut by 5.3% and 5%. This shift is mainly attributed to the stronger won, which has reduced dollar-denominated revenues, rather than a decline in the memory market itself. However, it is enough to prompt the market to reassess the direct impacts of exchange rate fluctuations on tech giants’ short-term performance.

Beyond surface-level big numbers, the upcoming Q3 earnings will deliver deeper signals to the market. Investors are closely watching the sustainability of memory chip price increases, the profit-locking effect of Long-Term Agreements (LTA), and whether next-generation high-bandwidth memory can truly translate into bottom-line profitability, in order to determine whether the current boom is a short-term spike or a structurally resilient long-term transformation.

Memory price rally slows, LTAs smooth out volatility

The sharp increases in average selling prices (ASP) of DRAM and NAND flash in Q2 were the main engines behind the robust results of both companies.

Moving into Q3, prices are projected to continue rising, though at a slower pace. According to Mirae Asset Securities, Samsung Electronics’ DRAM ASP is expected to climb 16.5% in Q3, but the growth rate will slow to 5.4% in Q4, indicating that the price rebound may be losing some momentum.

This price moderation is partly attributable to the increasing prevalence of Long-Term Agreements (LTA).

Currently, Samsung Electronics has secured 60% to 70% of its memory capacity under LTAs, while SK Hynix completed LTA negotiations with about ten core clients in Q2. These long-term contracts provide stability for enterprises, smoothing the dramatic volatility that frequently haunts the memory industry. However, during periods of rapid price increases, because contract prices often lag behind spot prices, LTAs can also somewhat cap profit upside.

HBM4 mass production accelerates, vying for AI infrastructure dominance

The third quarter was also a turning point for next-generation high-bandwidth memory (HBM4), which is essential for advanced AI applications.

With increasing chip shipments for Nvidia’s next-generation AI platform Vera Rubin, Samsung Electronics expects Q3 HBM4 sales to be more than triple those of Q2, accounting for over 60% of its total HBM revenue in the second half of 2026. For SK Hynix, the challenge lies in scaling HBM4 production while maintaining leadership in the HBM3E market. Third-quarter results will provide early clues about the shape of this high-stakes race.

This hunger for high-bandwidth memory is reshaping the fundamental logic of the entire tech industry.

According to a report from KB Securities cited by Global Economic, as Meta launches agent-based AI applications like Muse, AI services are entering an era that demands continuous, sequential operation and much higher memory bandwidth. Traditional generative AI processes around 100 tokens per second, while agent-based AI’s needs soar to 1,000 tokens per second. This tenfold leap in data processing is fundamentally changing datacenter architectures.

KB Securities analyst Kim notes: “In AI datacenters, GPU is the heart, CPU is the brain, electricity is the oxygen, but memory is the blood circulation system that continuously supplies and recycles data. Ultimately, the key to AI datacenter performance and efficiency will shift toward memory.”

This trend is already visible industry-wide: AMD’s recent inclusion with Nvidia, Broadcom, and Micron in the “trillion dollar market cap club” and its 107% year-on-year surge in Q2 datacenter revenue show that market attention on CPUs and memory now matches that on GPUs. Samsung Electronics is already targeting next-generation “zHBM” technology, planning to stack memory directly atop GPUs and aiming to have samples available by end-2027.

Foundry business looks up, ‘chipflation’ tests device division

Beyond its core memory business, Samsung Electronics’ non-memory segments are also in the market spotlight.

After consecutive losses since 2023, Samsung’s foundry business is widely expected to return to profitability in Q3, buoyed by expanded 4nm Language Processing Unit (LPU) capacity and improved yields.If this target is met, it would greatly boost investor confidence and remove a major valuation overhang that has weighed on Samsung for years.

However, the Device Experience (DX) unit—which manages smartphones and TVs—is facing the “chipflation paradox.”

In Q2, strong sales of high-end devices like Galaxy Foldables failed to offset rising component costs, leaving the DX unit with an operating loss of 8 billion won. Surging memory prices, positive for the semiconductor division, have become a heavy burden for the hardware units. The core question for Q3: Can high-end product sales absorb these cost pressures, or will this dynamic of “profit here, loss there” persist?

Beyond the “peak” debate, reshaping long-term valuation logic

As the Q3 earnings season approaches, the global semiconductor industry focus is shifting from the absolute size of profits to their durability.

Investors—cautious from past cycles—will stay vigilant: If Samsung Electronics and SK Hynix can show that long-term contracts are locking in demand, HBM4 brings substantial profit, and the foundry business is back on track, this supercycle could be more resilient than ever.

Conversely, if DRAM/NAND prices slow more than expected, or HBM4’s profit contribution falls short, debate over whether the semiconductor sector has “peaked” will reignite.

Over the next few weeks, these two earnings reports will not only decide the short-term market caps of the two giants but also set the tone for global tech infrastructure investment over the coming years.