Samsung expects AI memory chip shortage to extend into 2028 despite record semiconductor profits

Samsung Electronics expects the global shortage of AI memory chips to worsen next year and persist through 2028, signalling that demand for AI infrastructure continues to outpace supply even as concerns grow over whether hyperscale technology companies will sustain their heavy AI spending.

"The supply shortage in 2027 is expected to worsen compared to this year, and it is expected to continue in 2028," Jaejune Kim, Executive Vice President of Samsung's memory business, told analysts during the company's earnings call on Thursday.

The comments came as Samsung reported a more than 250-fold year-on-year increase in operating profit for its semiconductor business during the second quarter, driven by soaring demand and higher prices for memory chips used in AI servers.

The company said it has already signed long-term supply agreements with the world's five largest data centre operators and is close to finalising similar deals with five additional customers. The contracts, which run for at least five years, account for 60% to 70% of Samsung's long-term production capacity and include upfront payments and minimum pricing commitments to support future manufacturing investments.

The agreements provide further evidence that major cloud providers continue to invest aggressively in AI infrastructure despite recent investor concerns over the sustainability of AI capital expenditure.

Samsung also expects revenue from its next-generation HBM4 memory products to more than triple during the third quarter as production ramps up. The company said stronger HBM sales should help it increase its share of the high-bandwidth memory market and bring it closer to its overall DRAM market position during the second half of the year.

Samsung's semiconductor division posted an operating profit of 89.2 trillion won in the April-June quarter, while overall company operating profit reached 89.5 trillion won on revenue of 171.5 trillion won, in line with its earlier guidance.

The company said its contract chip manufacturing business is also expected to return to profitability in the near future as factory utilisation improves and semiconductor prices recover. Samsung remains on track to begin operations at its Taylor, Texas fabrication plant later this year and plans to start construction of a second facility that could begin mass production in 2030.

While higher memory prices have fuelled record profits for Samsung's semiconductor business, they weighed on its mobile division, which reported a 700 billion won operating loss as rising component costs squeezed margins.

Samsung's outlook reinforces expectations that AI-driven demand for high-bandwidth memory and advanced semiconductor capacity will remain a defining force in the chip industry over the next several years, with long-term supply agreements becoming increasingly common as cloud providers seek to secure access to critical AI components.