Samsung Projects Operating Profit to Surge to $66 Billion by 2026

Samsung Electronics is on track to see its operating profit more than double by 2026, reaching an estimated $66 billion, driven primarily by robust global demand for memory chips. This projection comes from a report released on November 26, 2023, by KB Investment & Securities, a leading South Korean brokerage firm.

In the first nine months of this year, Samsung recorded an operating income of $16 billion. The brokerage anticipates that this figure will exceed $13 billion in the fourth quarter alone. Notably, Samsung’s semiconductor sector is expected to contribute nearly 80% of its overall earnings during the October to December period.

Memory Chip Demand Fuels Growth

According to Kim Dong-won, head of research at KB Investment, the increase in prices for general-purpose memory chips has exceeded 50% this month. He stated, “Samsung Electronics is predicted to log a record operating profit approaching $14 billion in the fourth quarter.” This surge in profitability coincides with expectations that Samsung’s high-bandwidth memory (HBM4) will achieve quality certification sooner than anticipated, possibly within this year.

Samsung has historically lagged behind its local competitor, SK hynix, in the high-bandwidth memory segment, which is crucial for applications in artificial intelligence and supercomputing. However, the company has made strides in narrowing this gap and has begun producing its HBM3E variant. Recent developments also indicate that Nvidia is currently testing the next-generation HBM4, which could lead to a significant partnership.

Potential Stock Buyback Plans

As Samsung anticipates a significant increase in operating profit, Kim Dong-won speculated that the company may allocate a portion of its earnings to repurchase shares, aiming to enhance its stock value. Following the announcement, Samsung’s share price saw a notable rise of 3.52% on the Seoul stock exchange.

In addition to memory chips, Samsung’s diverse portfolio includes smartphones, flat-panel displays, and home appliances, highlighting the company’s broad market presence. The anticipated growth in the semiconductor sector is particularly encouraging for Samsung as it continues to innovate and respond to global market trends.

With these projected advancements, Samsung Electronics is poised for a transformative period in the coming years, underscoring its pivotal role in the tech industry.