Samsung's foundry business is expected to secure orders from Meta and Anthropic, and is projected to return to profitability in the fourth quarter.
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Samsung Electronics' foundry business returned to profitability in June for the first time in three years.
According to Mars Finance, on July 6th, Samsung Electronics' foundry business achieved monthly profitability in June of this year. This is the first time the business has recorded monthly profitability since 2023. Industry insiders believe that increased orders for high-bandwidth memory (HBM) base chips and improved yields in advanced processes reduced fixed costs, driving the recovery in profitability. Based on current trends, Samsung's foundry business is expected to achieve quarterly profitability in the third quarter of this year. Although the overall performance in the second quarter was still dragged down by losses in April and May, making it difficult to determine whether the entire quarter had achieved profitability, with the turnaround in June, Samsung generally believes that the possibility of the company achieving quarterly profitability in the third quarter has significantly increased. Analysts believe that this is the first time Samsung's foundry business has achieved monthly profitability since 2023. In the past few years, this business has been in a state of long-term loss, mainly due to multiple factors including low yields in advanced processes, the loss of large customers, and insufficient capacity utilization.
Samsung's 4nm production is nearly sold out, and some 8nm processes are nearing full capacity. Samsung's foundry services are beginning to selectively accept orders.
According to reports, industry insiders say that as demand for AI semiconductors heats up and orders from major global technology companies increase, Samsung Electronics' foundry division has implemented an allocation mechanism for certain processes. This mechanism concentrates limited capacity on more important customers and processes, prioritizing existing customers while selectively accepting new orders. (Sina Finance)
Samsung will release its preliminary Q2 financial results tomorrow: profits are expected to surge 18 times, with executives boasting that "one year's profits are equivalent to 40 years' worth."
According to BlockBeats, Samsung Electronics will release its preliminary Q2 2026 results on July 7th, while SK Hynix will list its ADRs on Nasdaq on July 10th. With these two major events for South Korea's semiconductor giants, the market is highly focused on the industry's health and the impact of AI chip demand on earnings. According to a compilation of forecasts from 30 analysts by the London Stock Exchange Group (LSEG), Samsung Electronics' Q2 operating profit is expected to be approximately 86 trillion won (about US$56.3 billion), with some brokerages predicting as high as 90 trillion won, representing a year-on-year increase of approximately 17-18 times, potentially marking its best quarterly performance in recent years. Prior to the preliminary earnings release, Samsung Electronics management has already released positive signals. Kim Yong-kwan, President of Business Strategy for Samsung Electronics Device Solutions (DS) division, stated at an internal all-hands meeting on July 3rd that the company's full-year 2026 operating profit is expected to meet market consensus expectations. Currently, the market generally expects Samsung Electronics' full-year operating profit to be approximately 300 trillion won (about US$200 billion), with improvements in AI servers, high-bandwidth memory (HBM), and wafer foundry business considered the main drivers of growth. Kim Yong-kwan also stated, "This year's profit will exceed the total cumulative profit of our 40 years in the semiconductor business." Industry insiders believe this is a rare instance of Samsung Electronics management proactively making a positive statement about the full-year profit outlook before officially disclosing the results, reflecting the company's strong confidence in the recovery of its AI-driven semiconductor business and its overall performance growth for the year. With the release of Samsung's financial report and the upcoming listing of SK Hynix's ADRs, the South Korean semiconductor sector will be entering its most important market observation window in the near future.
Deutsche Bank: Meta Cloud business may open a channel for monetizing hundreds of billions of dollars of AI investment, with revenue expected to increase by up to $30 billion by 2027.
According to Mars Finance, Deutsche Bank believes that Meta's plan to sell AI computing power and model access to external customers does not necessarily mean that Meta is weakening its cutting-edge models or "superintelligence" strategy. Rather, it's more likely that Meta is monetizing older, non-core, or temporarily idle computing power while retaining the latest generation chips for internal training. This move is expected to shift market concerns about Meta's "high capital expenditure and limited revenue returns" to a reassessment of its new high-profit revenue options. Deutsche Bank estimates that Meta's AI-related computing power may reach 8 to 11.5 GW by the end of 2027, of which approximately 1.2 to 2.7 GW can be sold externally. Assuming 75% is sold, with annualized revenue of $10 billion to $15 billion per GW, Meta could generate an additional $9 billion to $30 billion in revenue in 2027, 3% to 10% higher than market expectations, with a baseline scenario of approximately $17.5 billion. (Cailian Press)
Samsung Electronics' operating profit this year is expected to exceed the cumulative total of the past 40 years, and the second quarter may set a new record for the highest operating profit in the history of global technology companies.
According to Mars Finance, on July 6th, Kim Yong-kwan, head of the semiconductor business's operational strategy at Samsung Electronics, released optimistic signals at a departmental meeting on July 3rd, stating that this year's operating profit will meet market expectations, and adding that "the cumulative profit over the past 40 years of the semiconductor business is less than this year's profit alone." The market currently expects Samsung Electronics' full-year operating profit for 2026 to be approximately 300 trillion won, with a consensus expectation of 84.6 trillion won for the second quarter—if realized, this would surpass Nvidia's record of $53.536 billion in the first quarter of this year, setting a new record for the highest single-quarter operating profit for a global technology company. Kim Yong-kwan also emphasized that the company continues to invest over 40 trillion won in capital expenditure annually and plans to further expand its investment scale to cope with the continued expansion of demand for AI semiconductors. The combined performance of South Korea's two semiconductor giants is equally remarkable. SK Hynix's second-quarter operating profit is expected to be around 64.4 trillion won, bringing the combined total for both companies to approximately 149 trillion won, approaching 150 trillion won. However, some market analysts point out that the storage sector's stock prices have recently shown signs of peaking and declining. Whether they can rise further depends on whether the earnings significantly exceed expectations. The size and duration of long-term supply contracts and the price trend of storage in the second half of the year will be key variables to watch. Furthermore, SK Hynix's ADRs will be listed on July 10th. HSBC has raised its target price from 2.9 million won to 4 million won, believing that the ADR listing will improve accessibility for global investors and could bring a valuation premium of approximately 20%. JPMorgan Chase points out that the second-quarter earnings season will be a watershed moment for reassessing the storage cycle.
Driven by surging demand for AI, Samsung's Q2 operating profit is expected to jump 18 times.
According to Reuters, Samsung Electronics' operating profit for the second quarter of this year is expected to surge approximately 18 times year-on-year, reaching about 86 trillion won (approximately US$56.35 billion), benefiting from the continued tight supply of memory and a sharp rise in chip prices caused by the rapid development of AI. This would be the company's third consecutive quarter of record-high operating profit. Analysts point out that in addition to high-bandwidth memory (HBM), the widespread adoption of complex applications such as agentic AI has also greatly boosted the strong demand for traditional DRAM and NAND products, and the supply shortage in the memory market is expected to continue at least until next year. Despite the strong performance expectations, analysts warn that the timing of the actual second-quarter profit may be slightly lower than market expectations, as Samsung previously agreed to allocate 10.5% of its semiconductor division's operating profit as special bonuses to avoid strikes. Furthermore, the rising cost of memory components is severely squeezing the profit margins of Samsung's mobile business, and industry insiders expect that it may need to further increase the prices of smartphones and other terminal products in the second half of the year to alleviate cost pressures.