Samsung Electronics' (005930.KS) semiconductor division could post operating profit of as much as 370 trillion won ($274 billion) this year, a figure raised during recent talks between management and the labor union. That is 40 trillion won higher than the 330 trillion won cited at the division's business briefing in June. Expectations for chip earnings are climbing as demand for artificial intelligence semiconductors holds up more strongly than expected and prices for DRAM and NAND flash memory rise sharply.
According to industry sources on the 16th, executives of Samsung's Device Solutions division and union officials discussed performance bonuses and earnings in recent negotiations, during which a figure of up to 370 trillion won in operating profit for this year was cited, based on an exchange rate in the 1,350-won range against the dollar.
Earnings expectations for the division have been rising through the year. During wage negotiations in May, operating profit was projected at about 300 trillion won. At the division's business briefing in June, a figure of about 330 trillion won was presented. The 370 trillion won cited recently is 40 trillion won above that level.
Some calculations put the profit figure above 400 trillion won when bonus costs are taken into account. Because funds for performance bonuses are tied to earnings and booked as operating expenses, the profit figure grows larger when measured before those costs are reflected.
Samsung Electronics posted revenue of 305.37 trillion won and operating profit of 146.73 trillion won in the first half. Revenue at the Device eXperience division, which covers mobile phones and televisions, exceeds 100 trillion won, but the semiconductor division accounts for 97% of operating profit, making chips overwhelmingly dominant in earnings. The average of brokerage forecasts for Samsung's full-year operating profit over the past month also stands at about 375.7 trillion won. If expanded supply of high-bandwidth memory and rising memory prices continue, actual results could exceed existing estimates.
Behind the rising expectations is a surge in memory prices. The spot price for 64-gigabyte DDR5 server modules recently topped $3,100 at one point, more than double the fixed contract price of $1,500 as of the end of September. Prices for commodity products have also remained strong, pushing DRAM and NAND flash prices to their highest levels since records began.
"Inventories at the three memory makers are understood to have fallen to under 10 days recently," an industry official said. "The memory shortage could become more severe next year."
